TY  - RPRT
        AU  - Cahuc, Pierre
AU  - Zylberberg, Andre
        TI  - Optimum Income Taxation and Layoff Taxes
        PY  - 2005/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1678
        UR  - https://www.iza.org/publications/dp1678
        AB  - This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal layoff tax is equal to the social cost of job destruction, which amounts to the discounted value of the sum of unemployment benefits (that the state pays to unemployed workers) and payroll taxes (that the state does not get when workers are unemployed). Our quantitative analysis suggests that the introduction of layoff taxes, that are usually absent from actual tax schemes, could lead to significant increases in employment and GDP.
        KW  - optimal taxation
KW  - job destruction
KW  - layoff taxes
        ER  -