Optimal Capital Income Taxation in the Case of Private Donations to Public Goods

Shigeo Morita () and Takuya Obara ()
Additional contact information
Shigeo Morita: Graduate School of Economics, Osaka University
Takuya Obara: Graduate School of Economics, Hitotsubashi University

No 16-21, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In this study, we investigate optimal nonlinear labor and capital income tax- ation and subsidies for contribution goods in a dynamic setting. We show that when individuals can contribute to a public good|even if additive and separa- ble preference between consumption and labor supply is assumed and individuals differ only in earning ability|marginal capital income tax rate for low-income earners is not zero, indicating that the Atkinson{Stiglitz theorem does not hold. In particular, heterogeneous tastes for private consumptions endogenously occur. In addition, we derive a formula for optimal tax treatment of a public good, which is expressed in terms of the Pigouvian effect and the effect on an incentive com- patibility constraint.

Keywords: Capital income tax; Private donations; Tax treatment (search for similar items in EconPapers)
JEL-codes: H21 H23 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2016-08
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www2.econ.osaka-u.ac.jp/library/global/dp/1621.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1621

Access Statistics for this paper

More papers in Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by The Economic Society of Osaka University ().