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Empirically based optimal taxation of labour income in the dual income tax system

Awarded: NOK 0.50 mill.

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Project Period:

2008 - 2010

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Subject Fields:

1. Build a structural random utility labour supply model using relatively new Norwegian data. 2. Find the optimal rate structure on labour income taxation, conditional on welfare functions, and conditional on the capital tax rate, within a realistic clas s of tax systems that contains an approximation to the current system. 3. Describe the welfare changes in moving from the current system to the optimal system under our model. 4. Analyze the sensitivity of the optimal rate structure to different specifi cations of the social welfare functions and the constraining capital tax rate.

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