@techreport{1a290bb26beb45829cbf5d6135cfc29d,
title = "Lower tax for minimum wage earners",
abstract = "We show that minimum wage earners should pay a lower tax than high earners. Though intuitive, this idea is not supported by the existing literature. The optimal maximin tax curve and two-band taxes are usually decreasing. Since decreasing marginal taxes would be unpopular, by continuity a flat tax seems to be superior to increasing marginal taxes and should be a second best solution. However, using a simple utility function and a general income distribution, we find that lowering the marginal tax for minimum wage earners not only dominates the optimal flat tax under maximin, but also make everyone better off.",
keywords = "Flat tax, Income redistribution, Maximin, Pareto improvement",
author = "Felix FitzRoy and Jim Jin",
year = "2017",
month = feb,
language = "English",
series = "School of Economics and Finance Discussion Paper",
publisher = "University of St Andrews",
number = "1703",
type = "WorkingPaper",
institution = "University of St Andrews",
}