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Optimal Income Taxation With Quasi-Linear Preferences Revisited

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Author Info
Robin Boadway () (Queen's University)
Katherine Cuff (Queen's University)
Maurice Marchand (Universite Catholique de Louvain)

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Abstract

With quasi-linear in leisure preferences, closed-form solutions for the marginal tax rates and the marginal utility of consumption under utilitarian and maxi-min objectives depend only on the skill distribution. Bunching induced by binding second-order incentive conditions also depends only on the distribution, but does not affect solutions in the non-bunched range. These are affected if bunching is caused by binding non-negative income constraints. Specific skill distributions are considered and it shown that the pattern of marginal tax rates depend critically on whether or not the skill distribution is truncated at the upper end.

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File URL: http://www.econ.queensu.ca/working_papers/papers/qed_wp_984.pdf
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File Function: First version 1999
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Publisher Info
Paper provided by Queen's University, Department of Economics in its series Working Papers with number 984.

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Length: 33 pages
Date of creation: Apr 1999
Date of revision:
Handle: RePEc:qed:wpaper:984

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Related research
Keywords: Optimal Income Tax Quasi-Linear Preferences

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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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  1. Craig Brett & John A. Weymark, 2004. "Public Good Provision and the Comparative Statics of Optimal Nonlinear Income Taxation," Working Papers 0415, Department of Economics, Vanderbilt University. [Downloadable!]
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  2. Mathias, HUNGERBUEHLER, 2004. "The impact of Union Power on the Optimal Income Tax Schedule," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2004034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  3. Brett, Craig, 2008. "The effects of population aging on optimal redistributive taxes in an overlapping generations model," MPRA Paper 8585, University Library of Munich, Germany. [Downloadable!]
  4. Bovenberg, A.L., 2003. "Tax policy and labor market performance," Discussion Paper 90, Tilburg University, Center for Economic Research. [Downloadable!]
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  5. Felix Bierbrauer, 2006. "Optimal Income Taxation and Public Good Provision in a Two-Class Economy," Discussion Papers 97, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  6. Tommy Andersson, 2007. "A Note on Nonlinear Income Taxes and the Utility Possibility Set," Economics Bulletin, Economics Bulletin, vol. 8(5), pages 1-8. [Downloadable!]
  7. Yukihiro Nishimura, 2008. "Envy Minimization in the Optimal Tax Context," Working Papers 1178, Queen's University, Department of Economics. [Downloadable!]
  8. Boone, Jan & Bovenberg, A Lans, 2002. "The Optimal Taxation of Unskilled Labour with Job Search and Social Assistance," CEPR Discussion Papers 3446, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Jean HINDRIKS & Etienne LEHMANN & Alexis PARMENTIER, 2006. "Optimal income taxation and the shape of average tax rates," Economics Bulletin, Economics Bulletin, vol. 8(2), pages 1-6. [Downloadable!]
  10. Robin Boadway & Katherine Cuff, 1999. "A Minimum Wage Can Be Welfare-Improving and Employment-Enhancing," Cahiers de recherche CREFE / CREFE Working Papers 72, CREFE, Université du Québec à Montréal. [Downloadable!]
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  11. Robin, BOADWAY & Laurence, JACQUET, 2006. "Optimal Marginal and Average Income Taxation under Maxi-min," Université catholique de Louvain, Département des Sciences Economiques Working Paper 2006020, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
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  12. Laurent Simula, 2007. "Optimality conditions and comparative static properties of non-linear income taxes revisited," PSE Working Papers 2007-15, PSE (Ecole normale supérieure). [Downloadable!]
  13. M. Hungerbühler & E. Lehmann & A. Parmentier & P. Van Der Linden, 2003. "Optimal Income Taxation in an Equilibrium Unemployment Model : Mirrlees meets Pissarides," Working Papers ERMES 0306, ERMES, University Paris 2. [Downloadable!]
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  14. Hungerbühler, Mathias & Lehmann, Etienne & Parmentier, Alexis & Van der Linden, Bruno, 2005. "Optimal Redistributive Taxation in a Search Equilibrium Model," IZA Discussion Papers 1460, Institute for the Study of Labor (IZA). [Downloadable!]
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  15. Felix Bierbrauer, 2005. "Optimal Income Taxation and Public Good Provision in a Two-Class Economy," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2005_25, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  16. Craig Brett & John A. Weymark, 2000. "Financing Education Using Optimal Redistributive Taxation," Working Papers 0038, Department of Economics, Vanderbilt University, revised May 2001. [Downloadable!]
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  17. Cyril Hariton & Gwenäel Piaser & Gwenaël Piaser, 2006. "When Redistribution Leads to Regressive Taxation," Working Papers 2006_30, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
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