The public and private provision of pure public goods and the distortionary effects of income taxation: a political economy approach

Jun-ichi Itaya () and Albert Schweinberger

Canadian Journal of Economics/Revue canadienne d'économique, 2006, vol. 39, issue 3, 1023-1040

Abstract: Abstract A pure public good is provided by the government and the voluntary contributions of two types of households. The government finances its contribution by means of income taxation. The latter has distortionary effects. A third type of household never makes contributions. We analyse the effects of changes in the income tax rate on (a) the provision of the public good, (b) the private contributions of the households, and (c) changes in the distribution of income and welfare between contributing and non‐contributing households. We derive a simple and testable condition under which the lowering of the income tax entails a Pareto improvement. Un bien public pur est fourni par le gouvernement et par des contributions volontaires de deux types de ménages. Le gouvernement finance sa contribution par un impôt sur le revenu qui a des effets de distorsion. Un troisième type de ménages ne contribue d'aucune manière. On examine les effets de changements dans le taux d'imposition du revenu sur (a) la fourniture du bien public; (b) les contributions privées des ménages; (c) les changements dans la distribution du revenu et du bien‐être entre les ménages qui contribuent et ceux qui ne contribuent pas. On dérive une condition simple et vérifiable qui assure qu'une réduction d'impôt sur le revenu va engendrer une amélioration au sens de Pareto.

Date: 2006
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Citations: View citations in EconPapers (3)

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https://doi.org/10.1111/j.1540-5982.2006.00380.x

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Journal Article: The public and private provision of pure public goods and the distortionary effects of income taxation: a political economy approach (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:39:y:2006:i:3:p:1023-1040

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