Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26890
Authors: 
Bierbrauer, Felix
Year of Publication: 
2006
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2006,6
Abstract: 
This paper derives a version of the Samuelson rule, which takes not only the marginal costs of public funds into account but also the desirability of preference revelation. Under a linear income tax more able individuals suffer from a larger utility loss if taxes are raised to cover the cost of public good provision. This implies that these individuals are tempted to understate their valuation of the public good. Likewise, less productive individuals are inclined to exaggerate their valuation. These incentive concerns require the use of excessive taxes. They ensure a truthful revelation of preferences for the public good. Under an optimal utilitarian tax constitution, individuals are not granted influence on public good provision if the taxes needed to induce informative behavior are prohibitively high.
Subjects: 
Public Good Provision
Revelation of Preferences
Distortionary Taxation
Two-dimensional Heterogeneity
JEL: 
D71
D82
H21
H41
Document Type: 
Working Paper

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