Nonlinear Income Tax Reforms
AbstractThis paper addresses questions of the following nature: under what conditions does a welfare-improving reform of a nonlinear income tax system necessitate a change in a particular agent's marginal tax rate or total tax burden? Our analysis is therefore a study in tax reform, rather than in optimal taxation. We consider a simple model with three types of agents (high-skill, middle-skill, and low-skill) who have preferences that are quasi-linear in labour. Under these assumptions and using our methodology, specific characteristics of the initial suboptimal tax system can be determined when all welfare-improving tax reforms require specified changes in a particular agent's tax treatment. Some other necessary features of the tax reform can also be determined. Thus, unlike many tax reform analyses in the literature, we are able to reach a number of clear-cut conclusions.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 12/03.
Date of creation: Jan 2012
Date of revision:
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More information through EDIRC
tax reform; nonlinear income taxation.;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-01-25 (Accounting & Auditing)
- NEP-ALL-2012-01-25 (All new papers)
- NEP-PBE-2012-01-25 (Public Economics)
- NEP-PUB-2012-01-25 (Public Finance)
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