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Taxation for redistribution: Optimal tax structures along the utility possibility frontier

Author

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  • Burbidge, John

    (School of Economics, University of Waterloo)

Abstract

Mirrlees (1971) examined taxation for redistribution with imperfect information - the government can observe earnings but not wage rates or hours worked. Mirrlees assumed a one-good model with a continuum of types. Stiglitz (1982) worked out the two-type example of the Mirrlees model. This paper extends the distance-function approach to the Ramsey (1927) problem in Burbidge (2025a) to study optimal tax structures along the utility possibility frontier, upf, with two types and two goods.

Suggested Citation

  • Burbidge, John, 2026. "Taxation for redistribution: Optimal tax structures along the utility possibility frontier," Working Papers 26003, University of Waterloo, Department of Economics.
    • Handle: RePEc:wat:wpaper:26003
    as

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    File URL: https://hdl.handle.net/10012/23589
    File Function: First version, 2026
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    References listed on IDEAS

    as
    1. W. J. Corlett & D. C. Hague, 1953. "Complementarity and the Excess Burden of Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 21-30.
    2. Deaton, Angus, 1981. "Optimal Taxes and the Structure of Preferences," Econometrica, Econometric Society, vol. 49(5), pages 1245-1260, September.
    3. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    4. Burbidge, John, 2026. "Consumption taxation for redistribution," Working Papers 26007, University of Waterloo, Department of Economics.
    5. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    6. Jacobs, Bas & Boadway, Robin, 2014. "Optimal linear commodity taxation under optimal non-linear income taxation," Journal of Public Economics, Elsevier, vol. 117(C), pages 201-210.
    7. Sandmo, Agnar, 1976. "Optimal taxation : An introduction to the literature," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 37-54.
    8. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
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