@article{2bfe16e6140a44f9ad4ba82c304c1857,
title = "Heterogeneity and Government revenues: Higher taxes at the top?",
abstract = "How effective is a more progressive tax scheme in raising revenues? We answer this question in a life-cycle economy with heterogeneity across households and endogenous labor supply. Our findings show that a tilt of the U.S. income tax schedule towards high earners leads to small increases in revenue. Maximal revenue in the long run is only 6.8% higher than in our benchmark – about 0.8% of initial GDP – while revenues from all sources increase by just about 0.6%. Our conclusions are that policy recommendations of this sort are misguided if the aim is to exclusively raise government revenue.",
keywords = "Labor supply, Progressivity, Taxation",
author = "Nezih Guner and Martin Lopez-Daneri and Gustavo Ventura",
note = "Funding Information: Guner acknowledges support from EU 7th Framework Collaborative Project Integrated Macro-Financial Modeling for Robust Policy Design (MACFINROBODS) , Grant no. 612796 , from the Spanish Ministry of Economy and Competitiveness , Grant ECO2011–28822 , and from the Generalitat of Catalonia , Grant 2014SGR 803 . Thanks to Juan Carlos Conesa, Mark Huggett, Matthew Kahn, Selo Imrohoroglu, Tatyana Koreshkova and Vincenzo Quadrini. Thanks also to seminar participants at SED, Banco Central de Chile, Banco de Espa{\~n}a, Latin-American Econometric Society, Montreal Macroeconomics Conference, NBER Summer Institute, Barcelona GSE Summer Workshop, USC, CSU-Fullerton and Universities of Cologne, Houston and Pennsylvania for comments. The usual disclaimer applies. Publisher Copyright: {\textcopyright} 2016 Elsevier B.V.",
year = "2016",
month = jun,
day = "1",
doi = "10.1016/j.jmoneco.2016.05.002",
language = "English (US)",
volume = "80",
pages = "69--85",
journal = "Carnegie-Rochester Confer. Series on Public Policy",
issn = "0304-3932",
publisher = "Elsevier",
}