A Positive Theory of Income Taxation

Oriol Carbonell-Nicolau

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: We propose a dynamic version of the standard two-party electoral competition model adapted to nonlinear income taxation. The theory has a number of desirable features. First, equilibria always exist, even though the set of admissible tax policies is multidimensional. Second, the Nash set can be characterized generically, and its components give sharp predictions. Third, the features of equilibrium tax policies depend only on empirically meaningful fundamentals. Equilibrium tax schedules benefit the more numerous income groups and place the burden of taxation on income groups with fewer voters. For empirical income distributions, the features of an equilibrium tax schedule are reminiscent of Director's law of public income redistribution (Stigler [36]).

Keywords: nonlinear income taxation; electoral competitionh; Director's law; extensive zero-sum game (search for similar items in EconPapers)
JEL-codes: D7 H23 H31 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2007-10-26
New Economics Papers: this item is included in nep-pbe, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sas.rutgers.edu/virtual/snde/wp/2007-06.pdf (application/pdf)

Related works:
Journal Article: A Positive Theory of Income Taxation (2009)
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:rut:rutres:200706

Access Statistics for this paper

More papers in Departmental Working Papers from Rutgers University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().