The optimal linear taxation of employment and self-employment incomes

摘要: Abstract This paper models optimal linear taxation when occupational choice and labour supply are endogenous. Workers choose between paid employment, self-employment, unemployment. Self-employment incomes risky employees may be involuntarily laid off. Calibrating the model to UK economy, tax solution involves relatively high with substantial redistribution, a higher nominal (but not effective) marginal rate imposed on self-employed than employees. The implications of making unemployment benefits as well rates endogenous also analysed, robustness checks performed.