The Desirability of Commodity Taxation under Non-Linear Income Taxation and Heterogeneous Tastes

Emmanuel Saez

No 8029, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper revisits the Atkinson-Stiglitz result on uselessness of commodity taxation in the presence of optimal non-linear income taxation in a more general setup, namely when tastes are heterogeneous. This general analysis displays the key economic assumptions under which the Atkinson-Stiglitz result is robust. A small tax on a given commodity is desirable if high income earners have a relatively higher taste for this commodity or if consumption of this commodity increases with leisure. An application to the case of savings suggests that, even in the presence of optimal non-linear earnings taxation, there is a role for a supplemental capital income tax in the standard overlapping generation model.

JEL-codes: H21 H23 (search for similar items in EconPapers)
Date: 2000-12
Note: PE
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Citations: View citations in EconPapers (5)

Published as Saez, Emmanuel. "The Desirability Of Commodity Taxation Under Non-Linear Income Taxation And Heterogeneous Tastes," Journal of Public Economics, 2002, v83(2,Feb), 217-230.

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Journal Article: The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes (2002)
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