| The nature of the optimal income-tax schedule is studied under the assumption that up to a point working is desirable. It is found that, in a wide class of cases, probably the realistic ones, it is optimal for the marginal income tax rate to be one hundred per cent. For the lowest incomes. This requires a system of subsidies for low paid employments such that after subsidy income is constant for a range of low incomes. The practical difficulties of such a system are discussed. |