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Jacquet, Laurence
Lehmann, Etienne
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 8871
We propose a new method, that we call an allocation perturbation, to derive the optimal nonlinear income tax schedules with multidimensional individual characteristics on which taxes cannot be conditioned. It is well established that, when individuals differ in terms of preferences on top of their skills, optimal marginal tax rates can be negative. In contrast, we show that with heterogeneous behavioral responses and skills, one has optimal positive marginal tax rates, under utilitarian preferences and maximin.
optimal taxation
mechanism design
multidimensional screening problems
allocation perturbation
Document Type: 
Working Paper

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