A generalization of the Deaton-Hellwig results on uniform commodity taxation

Robin Boadway and Katherine Cuff

Journal of Public Economics, 2022, vol. 214, issue C

Abstract: Deaton (1979) showed that with an optimal linear progressive tax, commodity taxes are redundant if preferences are weakly separable between goods and labour and quasi-homothetic in goods. Hellwig (2009) later showed that any allocation with differential commodity taxes and an arbitrary linear progressive income tax is Pareto-dominated by one with uniform commodity taxes and a reformed linear progressive tax. We show that Deaton’s theorem and Hellwig’s extension apply a) with a piecewise linear income tax and tax credits, b) when some individuals earn no income either by choice or involuntarily, and c) when individual preferences for leisure differ.

Keywords: Optimal income tax; Commodity taxation; Piecewise linear income tax (search for similar items in EconPapers)
JEL-codes: H21 H23 H24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272722001335
Full text for ScienceDirect subscribers only

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:eee:pubeco:v:214:y:2022:i:c:s0047272722001335

DOI: 10.1016/j.jpubeco.2022.104731

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().