A Note on Nonlinear Income Taxes and the Utility Possibility Set

Tommy Andersson

Economics Bulletin, 2007, vol. 8, issue 5, 1-8

Abstract: This note analyzes constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left. The main result demonstrates that if all individuals have a positive consumption at the tax schedule that maximizes the utility of the worst-off individual, then the constrained utility possibility set is convex. As a consequence, all constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left can be identified by maximizing a weighted summation of net utilities.

JEL-codes: H2 (search for similar items in EconPapers)
Date: 2007-05-29
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