Optimal progressive taxation in UPHI (ρUPHI = 0.3) model with alternate preference parameters.
| . | (1) . | (2) . | (3) . | (4) . | (5) . |
|---|---|---|---|---|---|
| . | Benchmark . | $\begin{array}{l}\eta =0.265\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.28\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =2.5 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =3.5 \end{array}$
. |
| Output (GDP) | 95.12 | 95.20 | 91.55 | 93.56 | 90.94 |
| Capital (K) | 90.53 | 90.84 | 85.81 | 88.64 | 84.99 |
| Non-medical consumption (C) | 95.74 | 95.71 | 91.93 | 94.01 | 91.25 |
| Suits index (income tax) | 0.070 | 0.072 | 0.107 | 0.094 | 0.107 |
| Optimal tax progressivity (τ*) | 0.039 | 0.041 | 0.071 | 0.057 | 0.071 |
| Scaling parameter (λ) | 0.900 | 0.904 | 1.015 | 0.964 | 1.016 |
| Tax break threshold | |${\$}$|201 | |${\$}$|201 | |${\$}$|1,402 | |${\$}$|602 | |${\$}$|1,402 |
| Welfare (CEV in %): | −2.074 | −2.921 | −2.081 | −2.022 | −2.411 |
| . | (1) . | (2) . | (3) . | (4) . | (5) . |
|---|---|---|---|---|---|
| . | Benchmark . | $\begin{array}{l}\eta =0.265\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.28\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =2.5 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =3.5 \end{array}$
. |
| Output (GDP) | 95.12 | 95.20 | 91.55 | 93.56 | 90.94 |
| Capital (K) | 90.53 | 90.84 | 85.81 | 88.64 | 84.99 |
| Non-medical consumption (C) | 95.74 | 95.71 | 91.93 | 94.01 | 91.25 |
| Suits index (income tax) | 0.070 | 0.072 | 0.107 | 0.094 | 0.107 |
| Optimal tax progressivity (τ*) | 0.039 | 0.041 | 0.071 | 0.057 | 0.071 |
| Scaling parameter (λ) | 0.900 | 0.904 | 1.015 | 0.964 | 1.016 |
| Tax break threshold | |${\$}$|201 | |${\$}$|201 | |${\$}$|1,402 | |${\$}$|602 | |${\$}$|1,402 |
| Welfare (CEV in %): | −2.074 | −2.921 | −2.081 | −2.022 | −2.411 |
Notes: The US health insurance system is replaced by a universal public health insurance (UPHI) system that has a coinsurance rate of 30%. Each column shows steady-state results with a welfare maximizing (optimal) progressive income tax system. Numbers in rows marked with the % symbol are either fractions in percent or tax rates in percent. The other rows are normalized with values of the benchmark case. CEV values are reported as percentage changes in terms of lifetime consumption of a newborn individual with respect to consumption levels in the benchmark.
Optimal progressive taxation in UPHI (ρUPHI = 0.3) model with alternate preference parameters.
| . | (1) . | (2) . | (3) . | (4) . | (5) . |
|---|---|---|---|---|---|
| . | Benchmark . | $\begin{array}{l}\eta =0.265\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.28\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =2.5 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =3.5 \end{array}$
. |
| Output (GDP) | 95.12 | 95.20 | 91.55 | 93.56 | 90.94 |
| Capital (K) | 90.53 | 90.84 | 85.81 | 88.64 | 84.99 |
| Non-medical consumption (C) | 95.74 | 95.71 | 91.93 | 94.01 | 91.25 |
| Suits index (income tax) | 0.070 | 0.072 | 0.107 | 0.094 | 0.107 |
| Optimal tax progressivity (τ*) | 0.039 | 0.041 | 0.071 | 0.057 | 0.071 |
| Scaling parameter (λ) | 0.900 | 0.904 | 1.015 | 0.964 | 1.016 |
| Tax break threshold | |${\$}$|201 | |${\$}$|201 | |${\$}$|1,402 | |${\$}$|602 | |${\$}$|1,402 |
| Welfare (CEV in %): | −2.074 | −2.921 | −2.081 | −2.022 | −2.411 |
| . | (1) . | (2) . | (3) . | (4) . | (5) . |
|---|---|---|---|---|---|
| . | Benchmark . | $\begin{array}{l}\eta =0.265\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.28\\
\sigma =3.0 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =2.5 \end{array}$
. | $\begin{array}{l}\eta =0.272\\
\sigma =3.5 \end{array}$
. |
| Output (GDP) | 95.12 | 95.20 | 91.55 | 93.56 | 90.94 |
| Capital (K) | 90.53 | 90.84 | 85.81 | 88.64 | 84.99 |
| Non-medical consumption (C) | 95.74 | 95.71 | 91.93 | 94.01 | 91.25 |
| Suits index (income tax) | 0.070 | 0.072 | 0.107 | 0.094 | 0.107 |
| Optimal tax progressivity (τ*) | 0.039 | 0.041 | 0.071 | 0.057 | 0.071 |
| Scaling parameter (λ) | 0.900 | 0.904 | 1.015 | 0.964 | 1.016 |
| Tax break threshold | |${\$}$|201 | |${\$}$|201 | |${\$}$|1,402 | |${\$}$|602 | |${\$}$|1,402 |
| Welfare (CEV in %): | −2.074 | −2.921 | −2.081 | −2.022 | −2.411 |
Notes: The US health insurance system is replaced by a universal public health insurance (UPHI) system that has a coinsurance rate of 30%. Each column shows steady-state results with a welfare maximizing (optimal) progressive income tax system. Numbers in rows marked with the % symbol are either fractions in percent or tax rates in percent. The other rows are normalized with values of the benchmark case. CEV values are reported as percentage changes in terms of lifetime consumption of a newborn individual with respect to consumption levels in the benchmark.
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