On the political economy of nonlinear income taxation

Marcus Berliant and Miguel Gouveia

MPRA Paper from University Library of Munich, Germany

Abstract: The political economy setting of voting over general nonlinear income taxes with labor disincentives and information asymmetry in consumer/worker/voter types is considered. Agents do not communicate or coordinate with each other. The economy is the realization of a finite draw from a continuous distribution. The revenue required from a draw is determined by Pareto optimal provision of a public good for that draw. Assuming that the government must meet the revenue requirement for any possible draw, in other words the tax is robust, a majority rule equilibrium is shown to exist at the median voter's preferred tax function out of this robust set. The key restrictions on utility are additive separability, quasi-linearity, and utility from the public good is multiplicative in type.

Keywords: Voting; Income taxation; Public good; Robustness (search for similar items in EconPapers)
JEL-codes: D72 D82 H21 H41 (search for similar items in EconPapers)
Date: 2026-05-03
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