Optimal Income Taxation, Public Goods Provision and Robust Mechanism Design

Felix Bierbrauer ()
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Felix Bierbrauer: Max Planck Institute for Research on Collective Goods, Bonn

No 2008_31, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This paper extends the model of optimal income taxation due to Mirrlees (1971) and includes private information on public goods preferences. A mechanism design approach is used to establish the following result: If policies are required to be robustly implementable in the sense of Bergemann and Morris (2005), then the optimality conditions in the extended model with uncertainty about tax and expenditure policies, are the same as in the standard model of optimal income taxation. The paper provides a foundation for a widely used assumption in public nance, namely that individuals optimize their behaviour subject to a predetermined and commonly known tax system.

Keywords: Optimal Taxation; public goods provision; Revelation of Preferences (search for similar items in EconPapers)
JEL-codes: D71 D82 H21 H41 (search for similar items in EconPapers)
Date: 2008-08
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2008_31

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