Optimal labor income taxation with the dividend effect

Alexey Kushnir; Robertas Zubrickas

doi:10.1007/s00199-024-01578-5

Optimal labor income taxation with the dividend effect

Alexey Kushnir, Robertas Zubrickas

Carnegie Mellon University

Research output: Contribution to journal › Article › peer-review

1 Citation (SciVal)

Abstract

The unequal distribution of dividends implies the unequal distribution of the profit share of workers’ product of labor. In a Mirrleesian framework when dividends cannot be expropriated, we show that a progressive distribution of dividends creates a positive dividend effect on labor income taxes. Our numerical simulations show the dividend effect to be approximately four percentage points. We analyze the dividend effect under different market structures and its interplay with other forms of taxation.

Original language	English
Pages (from-to)	1169-1201
Number of pages	33
Journal	Economic Theory
Volume	78
Issue number	4
Early online date	13 May 2024
DOIs	https://doi.org/10.1007/s00199-024-01578-5
Publication status	Published - 31 Dec 2024

Keywords

D43
Dividends
H21
H23
Income tax policy
Inequality
Market structure

ASJC Scopus subject areas

Economics and Econometrics

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10.1007/s00199-024-01578-5Licence: CC BY

Cite this

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KW - Income tax policy

KW - Inequality

KW - Market structure

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Optimal labor income taxation with the dividend effect

Abstract

Keywords

ASJC Scopus subject areas

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