An Optimal Linear Income Tax with a Subsidy on Housing (in English)

This paper generalizes the standard model of the optimal linear income tax to include a subsidy on housing. Unlike previous literature, the author starts from a dynamic equilibrium model and examine the steady state equilibrium. She then analyses first order conditions for her linear tax structure. Given the higher complexity of this model, some new efficiency effects appear, coming from both the marginal tax rate and the subsidy on housing.