Optimal nonlinear taxes for families

Craig Brett

International Tax and Public Finance, 2007, vol. 14, issue 3, 225-261

Abstract: 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

Keywords: Asymmetric information; Household decision making; Multi-dimensional screening; Optimal income taxation (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (41)

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DOI: 10.1007/s10797-006-9000-1

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