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dc.contributor.authorFitzRoy, Felix
dc.contributor.authorJin, Jim
dc.identifier.citationFitzRoy , F & Jin , J 2017 ' Lower tax for minimum wage earners ' School of Economics and Finance Discussion Paper , no. 1703 , University of St Andrews , St Andrews .en
dc.identifier.otherPURE: 249184392
dc.identifier.otherPURE UUID: 1a290bb2-6beb-4582-9cbf-5d6135cfc29d
dc.description.abstractWe show that minimum wage earners should pay a lower tax than high earners. Though intuitive, this idea is not supported by the existing literature. The optimal maximin tax curve and two-band taxes are usually decreasing. Since decreasing marginal taxes would be unpopular, by continuity a flat tax seems to be superior to increasing marginal taxes and should be a second best solution. However, using a simple utility function and a general income distribution, we find that lowering the marginal tax for minimum wage earners not only dominates the optimal flat tax under maximin, but also make everyone better off.
dc.publisherUniversity of St Andrews
dc.relation.ispartofseriesSchool of Economics and Finance Discussion Paperen
dc.rightsCopyright (c) 2017, the authorsen
dc.subjectFlat taxen
dc.subjectIncome redistributionen
dc.subjectPareto improvementen
dc.subjectHB Economic Theoryen
dc.subjectHG Financeen
dc.subjectHF5601 Accountingen
dc.subjectSDG 8 - Decent Work and Economic Growthen
dc.titleLower tax for minimum wage earnersen
dc.typeWorking or discussion paperen
dc.description.versionPublisher PDFen
dc.contributor.institutionUniversity of St Andrews. School of Economics and Financeen

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