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Budget Balancedness and Optimal Income Taxation

Marcus Berliant () and Frank Page

Public Economics from EconWPA

Abstract: 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
Date: 2004-07-31
Note: Type of Document - pdf; pages: 44
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http://econwpa.repec.org/eps/pe/papers/0407/0407016.pdf (application/pdf)

Related works:
Journal Article: Budget Balancedness and Optimal Income Taxation (2006) Downloads
Working Paper: Budget Balancedness and Optimal Income Taxation (2003) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0407016

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