Age-dependent taxation and the optimal retirement benefit formula

This paper presents a comprehensive view of life-time taxation including both explicit taxation through the general tax system and implicit taxation via the retirement benefit formula. Individuals are heterogeneous with respect to productivity. It is shown that the optimal structure of age-dependent taxation can be characterized by a generalized Ramsey formula. Furthermore, the paper derives the optimal retirement benefit formula in the presence of the general tax system.optimal taxation , pay-as-you-go pension systems , implicit taxation , intra- and intergenerational equity