Nonlinear Income Taxes and the Utility Possibility Set

Tommy Andersson

No 2005:20, Working Papers from Lund University, Department of Economics

Abstract: This article analyzes constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left. It is demonstrated that as long as all individuals have a positive consumption at the tax schedule that maximizes the utility of the worst-off individual, the constrained utility possibility set is convex. As a consequence, all constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left can be identified by maximizing a weighted summation of net utilities.

Keywords: Nonlinear income taxation; Utility possibility set; Convexity (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2005-03-04, Revised 2006-09-28
New Economics Papers: this item is included in nep-mic
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Published in Economics Bulletin, 2007, pages 1-8.

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