High productivity taxpayers may receive negative tax rates, less redistribution likely.
The article explores how different characteristics of individuals affect optimal income taxation. By considering factors like productivity, labor supply elasticity, and basic needs, the study finds that some high productivity taxpayers may have negative marginal tax rates. This means that income alone may not be a clear indicator of who should receive subsidies. The research also shows that in societies with diverse characteristics, the government may choose less redistribution. Additionally, when age is not taken into account, there is less redistribution in an optimal tax system. The study uses a specialized method called SNOPT with an elastic-mode to solve these complex optimization problems effectively.