Progressive taxation shifts burden to lower income workers, optimal rates revealed.
The article explores how different types of labor affect optimal tax rates for high-income earners. When higher income workers are mostly from one type of labor, progressive taxation can shift some tax burden to lower income workers. The study shows that wage adjustments due to taxation are not costly enough to justify non-progressive tax policies or subsidies for high earners. The optimal tax rate may be lower than previously thought, possibly similar to current U.S. rates.