Figure 1

Estimates of consumption and labour supply functions
| A. Consumption function (ln C) | |||
|---|---|---|---|
| Variable | Coefficient | t-stat | Probability |
| constant | 4.24 | 10.30 | 0.00 |
| lnti (a1) | −0.49 | −13.10 | 0.00 |
| lncom | 0.82 | 40.20 | 0.00 |
| Adj. R2=0.99, J-stat=2.93E-17 | |||
Optimal vis-à-vis actual tax rates
| A.
| optimal
| ||
| 1.67τ y2.98+τ y=0.506 | 0.40 | ||
| B. actual (average)
| actual (average)
| optimal
| optimal
|
| 0.32 | 0.19 | 0.40 | 0.11 |

