@techreport{Blomquist2004Taxation,
abstract = {Non-linear income taxes and linear commodity taxes are analysed when people differ with
respect to ability, high-skilled agents have heterogeneous preferences, and neither individual
abilities nor preferences are observable. The paper highlights how informational constraints
may motivate differential treatment of people with different preferences for leisure even if
unequal treatment is not desirable per se. Which preference type will be better or worse off is
shown to depend on the self-selection constraints associated with the information asymmetry.
We characterize pure income tax optima, which may be bunching or separating
optima. In particular, the income tax may not be able to distinguish between those lowincome
people who are low-skilled and those who have strong preference for leisure. As is
shown, there may still be an impact on the optimum income tax schedule as it will depend on
the composition of the population with respect to types of individuals. Finally, the paper
addresses what can be achieved by commodity taxes when preferences are heterogeneous, in
particular, in terms of targeting groups that the income tax is incapable of discriminating
between.},
author = {S\"{o}ren Blomquist and Vidar Christiansen},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H23; H21; 330; optimum taxation; heterogeneous preferences; asymmetric information; Optimale Besteuerung; Pr\"{a}ferenztheorie; Optimale Besteuerung; Pr\"{a}ferenztheorie},
language = {eng},
number = {1244},
title = {Taxation and heterogeneous preferences},
type = {CESifo working papers},
url = {http://hdl.handle.net/10419/18883},
year = {2004}
}
