Optimal Nonlinear Income Taxation with a Two-Dimensional Population; A Computational Approach

Ritva Tarkiainen and Matti Tuomala

Computational Economics, 1999, vol. 13, issue 1, 16 pages

Abstract: We consider the optimal income tax problem when income differences are due to differences in abilities and in preferences between consumption and leisure among individuals. We model this problem as an optimal control problem and develop a numerical method for solving it. The method is based on the expansion of state and control variables in Lagrange series and on a spectral collocation method for approximating state equations. In this way the optimal control problem is reduced to a parameter optimization problem. The problem is difficult to solve, but we managed to do so with some limitations. On the basis of our calculations we conclude that the tax system in the two-dimensional case is more redistributive compared to that obtained from the one-dimensional model. Citation Copyright 1999 by Kluwer Academic Publishers.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://journals.kluweronline.com/issn/0927-7099/contents (text/html)
Access to the full text of the articles in this series is restricted.

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:kap:compec:v:13:y:1999:i:1:p:1-16

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10614/PS2

Access Statistics for this article

Computational Economics is currently edited by Hans Amman

More articles in Computational Economics from Springer, Society for Computational Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().