PUBLIC GOOD PROVISION AND THE COMPARATIVE STATICS OF OPTIMAL NONLINEAR INCOME TAXATION* |
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| Authors: | Craig Brett John A Weymark |
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| Institution: | 1. Mount Allison University, Canada;2. Vanderbilt University, U.S.A.;3. Craig Brett's research is generously supported by the Canada Research Chair Programme and by the Canada Foundation for Innovation. We are grateful to Laurence Jacquet and our referees for their comments. We have benefitted from comments received when this article was presented at the 2004 Canadian Public Economics Study Group conference, the 2006 Journées d'économie publique Louis‐André Gérard‐Varet, GREQAM, Hosei University, Waseda University, Universidad Autònoma de Barcelona, and the Universities of Birmingham, Tokyo, and Warwick. We are particularly grateful to Michael Devereux for an observation that lead to a strengthening of some of our theorems. Please address correspondence to: John A. Weymark, Department of Economics, Vanderbilt University, VU Station B #35189, 2301 Vanderbilt Place, Nashville, TN 37235‐1819, U.S.A. Phone: +615‐322‐1437. Fax: +615‐343‐8495. E‐mail: . |
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| Abstract: | Comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs an income tax schedule for redistributive purposes and provides a public good optimally. There are two types of individuals, distinguished by their skill levels, who have the same quasilinear preferences for labor supply and the consumption of a private and a public good. Comparative statics are obtained for the weights in a weighted utilitarian social welfare function, the prices of the two goods, a taste parameter that measures the onerousness of working, and the skill levels. |
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