Alexei V. Zakharov Presented the Report on 'Eqilibrium taxation under income uncertainty'

On March 15 a research seminar on political economy took place at HSE. Alexei V. Zakharov (NRU HSE) spoke on 'Eqilibrium taxation under income uncertainty'.

Abstract:
Individuals are uncertain about the distribution of income in the economy, and often have an inaccurate perception of income inequality. We examine the effect of such uncertainty on political equilibrium, and the resulting taxation. We find that, more often than not, uncertainty should lead to higher taxation. We also analyze the equilibrium effect of social interactions that allow an individual to obtain additional information on income distribution by observing the incomes of one’s friends and acquaintances. We find that such interactions are likely to reduce tax rates, relative to the case when individuals can only observe their own income.