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Stylized Results on Tax Uncertainty

This chapter summarizes stylized results produced by the analysis scripts in this repository (blocks 1–4). Figures are generated by make figures (or make myst) and written to paper/figures/.

Block 1: Bias and utility loss

Block 1: Utility loss vs. perceived tax bias. The worker chooses labor based on a biased tax perception; utility is realized at the true rate.

Figure 1:Block 1: Utility loss vs. perceived tax bias. The worker chooses labor based on a biased tax perception; utility is realized at the true rate.

Block 2: Uncertainty and utility loss

Block 2: Utility loss vs. symmetric tax uncertainty. Shows both the expected-tax optimization rule and the expected-utility maximizing labor rule.

Figure 2:Block 2: Utility loss vs. symmetric tax uncertainty. Shows both the expected-tax optimization rule and the expected-utility maximizing labor rule.

Block 3: Two workers and planner with ex-post demogrant

Block 3: Average welfare vs. tax (two workers). Planner sets the tax and demogrant under perfect information, then demogrants are adjusted ex-post under uncertainty.

Figure 3:Block 3: Average welfare vs. tax (two workers). Planner sets the tax and demogrant under perfect information, then demogrants are adjusted ex-post under uncertainty.

Block 4: Optimal taxes and social welfare under uncertainty

Block 4: Optimal tax vs. tax-rate uncertainty. The planner internalizes uncertainty; optimal taxes decline as uncertainty rises.

Figure 4:Block 4: Optimal tax vs. tax-rate uncertainty. The planner internalizes uncertainty; optimal taxes decline as uncertainty rises.

Block 4: Average welfare vs. tax-rate uncertainty. Expected welfare falls relative to perfect information due to concavity.

Figure 5:Block 4: Average welfare vs. tax-rate uncertainty. Expected welfare falls relative to perfect information due to concavity.

Notes

Methodology
Empirical Approach
Results
Reproducing Stylized Results (Blocks 1–4)