Public Goods, Self-Selection and Optimal Income Taxation

Robin Boadway and Michael Keen

International Economic Review, 1993, vol. 34, issue 3, 463-78

Abstract: Using the self-selection approach to tax analysis, this paper derives a modified Samuelson Rule for the provision of public goods when the government deploys an optimal nonlinear income tax. This approach gives a straightforward interpretation of the central result in this area, generalizes it, and provides a simple characterization of optimal policy in a wide range of circumstances. The analysis also emphasizes and clarifies the significance of the choice of numeraire for the optimality of "decentralizing" public spending decisions. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1993
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Working Paper: Public Goods, Self-Selection and Optimal Income Taxation (1991)
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