Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/82548 
Year of Publication: 
2009
Series/Report no.: 
Working Paper No. 2009:3
Publisher: 
Uppsala University, Department of Economics, Uppsala
Abstract: 
This paper deals with the consequences of the assumption of negatively interdependent preferences for the shape of the optimal nonlinear income tax and the effcient level of public good provision in a setting where the policy maker maximizes an inequality averse social welfare function and the agents' market ability is private information. The analysis points out that the terms added in the tax formulas due to the presence of Veblen effects might justify a reduction in the optimal marginal tax rates faced by the different individuals. Also, the desirability of negative marginal tax rates cannot be ruled out. With respect to the issue of the optimal level of public good provision, we derive a modfied Samuelson rule and highlight the fact that the Veblen-based part of the formula might require to distort downwards the efficient level of public good provision.
Subjects: 
optimal nonlinear income taxation
modified Samuelson rule
Veblen effects
JEL: 
H21
H23
H41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
463.89 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.