Type
Working paper
Title
Taxing the Rich
Author(s)
LANDIER Augustin - Toulouse School of Economics (TSE) (Author)
PLANTIN Guillaume - Université Toulouse 1 Capitole (Author)
Keywords
Taxation, Theoretical framework, Tax-avoidance
Abstract
EN
Affluent households can respond to taxation with means that are not economically viable for the rest of the population, such as sophisticated tax plans and international tax arbitrage. This paper studies an economy in which an inequality-averse social planner faces agents who have access to a tax-avoidance technology with increasing returns to scale, and who can shape the risk profile of their income as they see fit. Scale economies in avoidance imply that optimal taxation is regressive at the top. This in turn may trigger excessive risk taking.

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