Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/78410 
Authors: 
Year of Publication: 
2000
Series/Report no.: 
Bonn Econ Discussion Papers No. 14/2000
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
Abstract: 
In a recent contribution, H. Naito (1999) has shown that production efficiency may be violated in the optimum with non-linear income taxation. Using a slightly simpler framework, this paper complements Naito's analysis in showing that production efficiency does not hold in the optimum with (i) non-linear and (ii) linear income taxation provided that second best and first best do not coincide. These findings indicate that income taxation generally implies the desirability to complement the distortion between consumer and producer prices by means of a corresponding distortion in input prices.
Subjects: 
income taxation
production efficiency
JEL: 
H21
H23
Document Type: 
Working Paper

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