IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

A loglinear tax and transfer function: majority voting and optimal rates

Listed author(s):
  • John Creedy


    (Victoria University of Wellington and Melbourne University)

  • Solmaz Moslehi

    (Monash University)

This paper explores the use of a loglinear tax and transfer function, displaying increasing marginal and average tax rates along with a means-tested transfer payment. The two parameters are a break-even income threshold, where the average tax rate is zero, and a tax parameter equivalent to the marginal tax rate at the break-even income level. When combined with Cobb-Douglas utility, the resulting labour supply is fixed and independent of the individual’s wage rate. For an additive social welfare function involving the sum of logarithms of (indirect) utilities, a convenient expression is available for the optimal tax rate in a framework in which individuals differ only in the wage rate they face. It is shown that a unique optimal rate exists, which depends on the preference for consumption and the inequality of wage rates. This coincides with the majority voting equilibrium rate. As with the linear tax function, higher inequality is associated with choice of a higher tax rate.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Article provided by Bankwest Curtin Economics Centre (BCEC), Curtin Business School in its journal Australian Journal of Labour Economics (AJLE).

Volume (Year): 14 (2011)
Issue (Month): 1 ()
Pages: 1-14

in new window

Handle: RePEc:ozl:journl:v:14:y:2011:i:1:p:1-14
Contact details of provider: Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ozl:journl:v:14:y:2011:i:1:p:1-14. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alan Duncan)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.