How does the Optimal Two-Bracket Income Tax Depend on Wage Inequality

部分内容如下：

Abstract
Using the CES utility function, this paper numerically examines the relationship
between the optimal tax-and-transfer systems and inequality of earnings under major
alternative social welfare functions. In a one-bracket linear tax system, both the optimal
income tax rate and the government transfer increase when earning inequality expands.
In the two-bracket case, the optimal lower bracket rate and income threshold do not
change in a way that is monotonic. The optimal upper bracket rate and government
transfer increase with the wage spread. The lower bracket rate is greater than the upper
bracket one when the spread is small, but it is larger when the spread is large. With a
large elasticity of substitution between consumption and leisure, the two-bracket tax
structure converges to the one-bracket case when the wage spread becomes large.
Key words: optimal income taxation, two-bracket linear income tax, wage inequality