Nonlinear Income Tax Reforms
This 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.
|Date of creation:||Jan 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom|
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- Craig Brett & John A. Weymark, 2010.
"How Optimal Nonlinear Income Taxes Change When the Distribution of the Population Changes,"
Vanderbilt University Department of Economics Working Papers
1003, Vanderbilt University Department of Economics.
- Brett, Craig & Weymark, John A., 2011. "How optimal nonlinear income taxes change when the distribution of the population changes," Journal of Public Economics, Elsevier, vol. 95(11), pages 1239-1247.
- Alan Krause, 2009. "A general equilibrium analysis of the Laffer argument," Social Choice and Welfare, Springer, vol. 33(4), pages 601-615, November.
- repec:ubc:bricol:98-09 is not listed on IDEAS
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- Paul Makdissi & Jean-Yves Duclos, 2002.
"Socially-Improving Tax Reforms,"
Cahiers de recherche
02-01, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke, revised 2004.
- Simula, Laurent, 2009.
"Optimal Nonlinear Income Tax and Nonlinear Pricing: Optimality Conditions and Comparative Static Properties,"
Working Paper Series, Center for Fiscal Studies
2009:11, Uppsala University, Department of Economics.
- Laurent Simula, 2010. "Optimal nonlinear income tax and nonlinear pricing: optimality conditions and comparative static properties," Social Choice and Welfare, Springer, vol. 35(2), pages 199-220, July.
- Alan Krause, 2007. "Generational incidence of savings taxation versus capital-income taxation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(2), pages 113-129.
- Myles,Gareth D., 1995. "Public Economics," Cambridge Books, Cambridge University Press, number 9780521497695, 1.
- Sushama Murty & R. Robert Russell, 2005. "Externality Policy Reform: A General Equilibrium Analysis," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(1), pages 117-150, 02.
- Brett, Craig, 1998. "Tax reform and collective family decision-making," Journal of Public Economics, Elsevier, vol. 70(3), pages 425-440, December.
- Tatsuo Hatta, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 1-21.
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