Budget Balancedness and Optimal Income Taxation
AbstractWe make two main 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.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0407016.
Length: 44 pages
Date of creation: 31 Jul 2004
Date of revision:
Note: Type of Document - pdf; pages: 44
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Optimal Income Taxation; Public Goods; Budget Balancing; Single Crossing; Nonatomic Economy; Atomless Economy;
Other versions of this item:
- 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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