Optimal capital income taxation in the case of private donations to public goods

Shigeo Morita () and Takuya Obara ()
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Shigeo Morita: Osaka University
Takuya Obara: Hitotsubashi University

Economics Bulletin, 2018, vol. 38, issue 2, 921-939

Abstract: In this study, we investigate optimal nonlinear labor and capital income taxation and subsidies for contribution goods in a dynamic setting. We show that when individuals can contribute to a public good--even if additive and separable 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.

Keywords: Capital income tax; Private donations; Tax treatment (search for similar items in EconPapers)
JEL-codes: H2 H3 (search for similar items in EconPapers)
Date: 2018-04-30
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