Optimal federal income tax formula bridges regional inequality gap effectively.
The article explores how to best distribute income in a society with different levels of inequality and conflicting goals between local and central governments. By analyzing various factors like income distribution and labor mobility, the researchers found that the optimal federal income tax depends on the gap in preferences between governments. They also discovered that decentralized redistribution, when combined with central redistribution, can be more effective than fully centralized redistribution in certain situations.