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International Tax and Public Finance

, Volume 14, Issue 3, pp 295–325 | Cite as

Optimal income transfers

  • Louis Kaplow
Article

Abstract

A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance, and work inducements. This work is largely independent of that on the optimal nonlinear income tax, yet formulations of such a tax necessarily address how low-income individuals should be treated. This paper draws on the optimal income taxation literature to illuminate the analysis of transfer programs, including the level and shape of marginal tax rates (including phase-outs), the structure of categorical assistance, and the role of work inducements in an optimal income transfer scheme.

Keywords

Categorical assistance Income maintenance Optimal taxation Transfer programs Welfare Work requirements 

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Copyright information

© Springer Science + Business Media, LLC 2006

Authors and Affiliations

  1. 1.Harvard UniversityCambridgeUSA
  2. 2.NBERCambridgeUSA

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