The Optimal Income Tax Schedule

Kelvin Lancaster
The principal conclusion of this paper is that the generic pattern for the optimal income tax schedule is that of a monotonically rising marginal tax rate. The belief that the marginal rate should decline to zero at the upper end of the scale is not supported. The Results should hold for high and low elasticities of labor-leisure substitution, and for additive as well as strictly concave welfare functions. Differences between the conclusions of this paper...
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