Dear all,

We kindly invite you to our next ECON Theory and Policy Seminar talk on

Thursday, March 2, 2023 from 5:00 – 6:30 pm (Seminarroom DB04 yellow, Freihaus Building, yellow area, 4^th floor)

Taxation of Top Incomes and Tax Avoidance
Almuth Scholl (Universität Konstanz) https://www.wiwi.uni-konstanz.de/scholl/team/prof-dr-almuth-scholl/

This paper studies the aggregate and distributional effects of raising the top marginal income tax rate in the presence of tax avoidance. To this end, we develop a quantitative macroeconomic model with heterogeneous agents and occupational choice in which entrepreneurs can avoid taxes in two ways. On the extensive margin, entrepreneurs can choose the legal form of their business organization to reduce their tax burden. On the intensive margin, entrepreneurs can shift their income between different tax bases. In a quantitative application to the US economy, we find that tax avoidance lowers productive efficiency, generates sizable welfare losses, and reduces the effectiveness of the top marginal tax rate at lowering inequality. Tax avoidance reduces the optimal top marginal income tax rate from 47% to 43%.

Further events: https://www.econ.tuwien.ac.at/index.html#events

Best regards,

Julia Hutter

for Alexia Fürnkranz-Prskawetz

Julia Hutter

TU Wien

Institute of Statistics and Mathematical Methods in Economics

Economics E105-3

Phone: +43-1-58801x10531

E-Mail: julia.hutter@tuwien.ac.at