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PUBLIC GOOD PROVISION AND THE COMPARATIVE STATICS OF OPTIMAL NONLINEAR INCOME TAXATION *
Author(s) -
Brett Craig,
Weymark John A.
Publication year - 2008
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2008.00479.x
Subject(s) - comparative statics , economics , income tax , microeconomics , optimal tax , consumption (sociology) , public good , welfare , schedule , social welfare function , private good , government (linguistics) , nonlinear system , public economics , labour economics , market economy , social science , linguistics , philosophy , management , sociology , physics , quantum mechanics
Comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs an income tax schedule for redistributive purposes and provides a public good optimally. There are two types of individuals, distinguished by their skill levels, who have the same quasilinear preferences for labor supply and the consumption of a private and a public good. Comparative statics are obtained for the weights in a weighted utilitarian social welfare function, the prices of the two goods, a taste parameter that measures the onerousness of working, and the skill levels.