EconPapers    
Economics at your fingertips  
 

Paternalism against Veblen: Optimal Taxation and Non-Respected Preferences for Social Comparisons

Thomas Aronsson () and Olof Johansson-Stenman ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, http://www.econ.umu.se

No 945, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This paper compares optimal nonlinear income tax policies of welfarist and paternalist governments, where the latter does not respect individual preferences regarding relative consumption. Consistent with previous findings, relative consumption concerns under welfarism typically imply higher marginal income tax rates. Remarkably, the optimal marginal tax rules are very similar in the paternalist case. For example, if relative consumption concerns are based on mean value comparisons and all consumers are equally positional, then the first-best tax rules are identical between the governments. Extensive numerical simulations supplement the theoretical results, and make it possible to compare also tax levels and overall redistribution.

Keywords: nonlinear taxation; redistribution; status; positional goods (search for similar items in EconPapers)
JEL-codes: D62 H21 H23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv
Date: 2017-02-10
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.usbe.umu.se/digitalAssets/193/193468_ues945.pdf (application/pdf)

Related works:
Working Paper: Paternalism against Veblen: Optimal Taxation and Non-Respected Preferences for Social Comparisons (2014) Downloads
Working Paper: Paternalism against Veblen: Optimal Taxation and Non-Respected Preferences for Social Comparisons (2014) Downloads
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:hhs:umnees:0945

Access Statistics for this paper

More papers in Umeå Economic Studies from Umeå University, Department of Economics Department of Economics, Umeå University, S-901 87 Umeå, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by David Skog ().

 
Page updated 2019-04-12
Handle: RePEc:hhs:umnees:0945