Poverty Alleviation and Tax Policy

Jukka Pirttilä and Matti Tuomala

No 315, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: This paper examines public good provision and tax policy ­ optimal non-linear income taxation and linear commodity taxation ­ when the government departs from purely welfarist objective function and seeks to minimise poverty. This assumption reflects much policy discussion and may help understand some divergences of practical tax policy from lessons in optimal tax analysis. In contrast to Atkinson and Stiglitz (1976), it may be optimal to use differentiated commodity tax rates, including the taxation of savings, even if preferences are separable in goods and leisure. The optimal effective marginal tax rate at the bottom of the distribution may be negative, suggesting that wage subsidy schemes can be optimal. Finally, optimal provision rules are derived for a public good under poverty minimisation.

Keywords: povery; income taxation; commodity taxation (search for similar items in EconPapers)
JEL-codes: H21 H41 I32 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2003-04
References: Add references at CitEc
Citations:

Downloads: (external link)
http://urn.fi/urn:isbn:951-44-5673-4 First version, 2003 (application/pdf)

Related works:
Journal Article: Poverty alleviation and tax policy (2004)
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:tam:wpaper:0315

Access Statistics for this paper

More papers in Working Papers from Tampere University, Faculty of Management and Business, Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sami Remes (sami.remes@tuni.fi).