US income taxation of new financial products

Redistributive Labor - Income Taxation and Bankruptcy in US States ∗

Both bankruptcy regulation and redistributive taxation vary considerably across US states. We model the interactions between these two policies: redistributive taxation targets intratemporal inequality whereas asset exemptions in bankruptcy procedures help agents to smooth consumption across time. We derive sufficient conditions under which more redistributive taxation makes bankruptcy exemptio...

Taxation of Interest Income

Why is interest income taxed so much more heavily than other forms of capital income? This differential tax treatment has generated substantial tax arbitrage, resulting in lower tax revenue, efficiency costs, and apparently net gains to rich borrowers and net losses to poor lenders, together suggesting that this tax treatment makes no sense on welfare grounds. In examining this argument more fo...

Efficient Taxation of Income

Voting over income taxation

A major problem of the positive theory of income taxation is to explain why statutory income tax schedules in practice are marginal-rate progressive. While it is commonly believed that this is but a simple consequence of the fact that the number of relatively poor voters exceeds that of richer voters in general, putting this contention in a voting equilibrium context is not a trivial task. We d...

Optimal Dual Income Taxation

There is a strong case for arguing that, in contradiction to some traditional arguments in public economics, capital income should be taxed, though not necessarily under the same rate schedule as labour earnings. The Dual Income Taxation (DIT) system consists of two parallel piecewise linear tax schedules, in which that for capital income has a zero lower bracket rate and an upper bracket rate ...