Budget Balancedness and Optimal Income Taxation
Marcus Berliant () and
Public Economics from University Library of Munich, Germany
We make two main contributions to the theory of optimal income taxation. First, assuming conditions sufficient for existence of a Pareto optimal income tax and public goods mechanism, we show that if agents’ preferences satisfy an extended notion of single crossing called capacity constrained single crossing, then there exists a Pareto optimal income tax and public goods mechanism that is budget balancing. Second, we show that, even without capacity constrained single crossing, existence of a budget balancing, Pareto optimal income tax and public goods mechanism is guaranteed if the set of agent types contains no atoms.
Keywords: Optimal Income Taxation; Public Goods; Budget Balancing; Single Crossing; Nonatomic Economy; Atomless Economy (search for similar items in EconPapers)
JEL-codes: H21 H41 H62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Note: Type of Document - pdf; pages: 44
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Journal Article: Budget Balancedness and Optimal Income Taxation (2006)
Working Paper: Budget Balancedness and Optimal Income Taxation (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0407016
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