TY  - UNPD
A1  - Brüggemann, Bettina
A1  - Yoo, Jinhyuk
T1  - Aggregate and distributional effects of increasing taxes on top income earners
T2  - SAFE working paper series ; No. 113
N2  - We analyze the macroeconomic implications of increasing the top marginal income tax rate using a dynamic general equilibrium framework with heterogeneous agents and a fiscal structure resembling the actual U.S. tax system. The wealth and income distributions generated by our model replicate the empirical ones. In two policy experiments, we increase the statutory top marginal tax rate from 35 to 70 percent and redistribute the additional tax revenue among households, either by decreasing all other marginal tax rates or by paying out a lump-sum transfer to all households. We find that increasing the top marginal tax rate decreases inequality in both wealth and income but also leads to a contraction of the aggregate economy. This is primarily driven by the negative effects that the tax change has on top income earners. The aggregate gain in welfare is sizable in both experiments mainly due to a higher degree of distributional equality.
T3  - SAFE working paper - 113 
KW  - Top Income Taxation
KW  - Heterogeneous Agents
KW  - Incomplete Markets
KW  - Income and Wealth Inequality
Y1  - 2015
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/38621
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-386219
UR  - http://ssrn.com/abstract=2639673
IS  - July 13, 2015
PB  - SAFE
CY  - Frankfurt am Main
ER  -