Income tax reform in France: a case study
Résumé
This paper calibrates the graduated income tax system currently in place in France while assuming that the number of earning-ability types in the economy are four. It also computes the optimal linear and nonlinear income tax schedules for this economy. Its main nding is that while an optimal linear income tax is (in most scenarios) welfare superior to the current tax system, the welfare gain may be small. On the other hand, an optimal general income tax leads to substantial belfare gains over the present system.