Mardi | 2011-01-25
Mireille CHIROLEU-ASSOULINE – Mouez FODHA
This paper analyzes the environmental tax policy issues when labor is heterogeneous. The objec-tive is to assess whether an environmental tax policy could be Pareto improving, when the revenueof the pollution tax is recycled by a change in the labor tax properties. We show that, dependingon the heterogeneity characteristics of labor and on the initial structure of the tax system, a policymix could be designed in order to leave each class of worker unharmed. It consists of an increase inprogressivity together with a decrease in the ‡at rate component of the wage tax.