Optimal income tax rates found to ensure stability and efficiency.
The article discusses how to efficiently tax income while maintaining stability. It looks at different tax equilibria and their stability and efficiency. The study uses a model with two goods, leisure and consumption, and various individuals with different preferences and abilities. The researchers found that there are stable and efficient tax rates that maximize public revenue without being surpassed by others. The study also presents a model for how people behave in these tax equilibria and classifies the different types of equilibria.