Summary of “A Tale of Three Elasticities”

Today I’ll be providing an overview of one of my favorite studies, “Optimal Taxation of Labor Incomes: A Tale of Three Elasticities” by Piketty, Saez, and Stantcheva, linked here. Everything here is as presented in the paper, except for my own notes, which I will put in brackets [like this]. Alright, let’s get started!

1. Introduction

This study focuses on the optimal marginal tax rate on the labor incomes of the top 1%, a very relevant topic today. It’s an empirical fact that since the 80’s, top tax rates have gone down…