Reducing the dimensionality of a selfishly optimal nonlinear income tax problem

Craig Brett and John Weymark

Economic Theory Bulletin, 2018, vol. 6, issue 2, No 3, 157-169

Abstract: Abstract Röell (Voting over nonlinear income tax schedules, unpublished manuscript, 2012) considers a political economy version of the finite-type Mirrlees (Rev Econ Stud 38:175–208, 1971) nonlinear income tax problem in which each type proposes its selfishly optimal tax schedule with majority rule used to select among them. We show that it is possible to solve a selfishly optimal nonlinear income tax problem by first solving for the optimal consumptions using a reduced-form problem that only involves these variables and then using the optimal consumptions in two recursion formulae to compute the optimal incomes. The analysis extends the methodology introduced in Weymark (J Publ Econ 30:199–217, 1986b) so as to handle problems in which not all of the adjacent incentive constraints bind in the same direction.

Keywords: Mirrlees tax problem; Nonlinear income taxation; Redistributive taxation; D82; H21 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s40505-017-0131-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:etbull:v:6:y:2018:i:2:d:10.1007_s40505-017-0131-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40505

DOI: 10.1007/s40505-017-0131-6

Access Statistics for this article

Economic Theory Bulletin is currently edited by Nicholas C. Yannelis

More articles in Economic Theory Bulletin from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().