Budget Balancedness and Optimal Income Taxation
AbstractWe make two contributions to the theory of optimal income taxation. First, assuming conditions sufficient for existence of a Pareto optimal income tax and public goods mechanism, we show that if agents' preferences satisfy an extended notion of single crossing called capacity constrained single crossing, then there exists a Pareto optimal income tax and public goods mechanism that is budget balancing. Second, we show that, even without capacity constrained single crossing, existence of a budget balancing Pareto optimal income tax and public goods mechanism is guaranteed if the set of agent types contains no atoms. Copyright 2006 Blackwell Publishing, Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 8 (2006)
Issue (Month): 3 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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Other versions of this item:
- Marcus Berliant & Frank H. Page Jr., 2004. "Budget Balancedness and Optimal Income Taxation," Public Economics 0407016, EconWPA.
- Berliant, Marcus & Page Jr., Frank H., 2003. "Budget Balancedness and Optimal Income Taxation," Working Papers 1164, California Institute of Technology, Division of the Humanities and Social Sciences.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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