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Optimal nonlinear taxes for families

  • Craig Brett

    ()

The problem faced by a taxation authority choosing a tax schedule for families is modeled as a multi-dimensional screening problem. A description of the possible constrained Pareto-efficient mechanisms is given. The implications of a standard redistributive assumption on the sign of marginal tax rates is explored. In contrast to unidimensional taxation models, the redistributive assumption does not imply that marginal tax rates are everywhere non-negative. The qualitative features of optimal tax schedules are discussed. It is concluded that taxation based solely on total family income is rarely optimal. Copyright Springer Science + Business Media, LCC 2007

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File URL: http://hdl.handle.net/10.1007/s10797-006-9000-1
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Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 14 (2007)
Issue (Month): 3 (June)
Pages: 225-261

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Handle: RePEc:kap:itaxpf:v:14:y:2007:i:3:p:225-261
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=102915

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  1. Kanbur, R. & Keen, M. & Tuomala, M., 1990. "Optimal Non-Linear Income Taxation for the Alleviation of Income Poverty," The Warwick Economics Research Paper Series (TWERPS) 368, University of Warwick, Department of Economics.
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