| Publication Type | | Preprints |
| Author | | Felix Bierbrauer, Pierre C. Boyer |
| Year of Publication | | 2010 |
| Issue | | 2010/16 |
| Abstract | | We characterize the Pareto-frontier in a simple Mirrleesian model of income taxation. We show how the second-best frontier which incorporates incentive constraints due to private information on productive abilities relates to the first-best frontier which takes only resource constraints into account. In particular, we argue that the second-best frontier can be interpreted as a Laer-curve. We also use this second-best frontier for a comparative statics analysis of how optimal income tax rates vary with the degree of inequity aversion, and for
a characterization of optimal public-good provision. We show that a more inequity averse policy maker chooses tax schedules that are more redistributive and involve higher marginal tax rates, but chooses a lower public-goods provision level. |
| Publisher | | Max Planck Institute for Research on Collective Goods |
| Place Published | | Bonn |
| Export | | Tagged BibTex XML |
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| Supplementary Material | | |
| Keywords | | Optimal Income Taxation, Public-good provision, Laer-Curve |
| JEL-Codes | | D82, H21, H41 |
