Collectively Incentive Compatible Tax Systems

Publication Type  Preprints
Author  Felix Bierbrauer
Year of Publication  2006
Issue  2006/24
Abstract  This paper assumes that individuals possess private information both about their abilities and about their valuation of a public good.Individuals can undertake collective actions on order to manipulate the tax system and the decision on public good provision. Consequently, an implementable scheme of taxation has to be collectively incentive compatible. If preferences are additively separable, then an implementable tax systems has the following properties: (i) tax payments do not depend on public goods preferences and (ii) there is no scope for a collective manipulation of public goods preferences. For a quasilinear economy, the optimal tax system is explicitly characterized.
Pagination  34
Publisher  Max Planck Institute for Research on Collective Goods
Place Published  Bonn
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Keywords  Public Good Provision, Revelation of Preferences, Information Aggregation, Optimal Taxation
JEL-Codes  D71, D82, H21, H41