A Contribution to the Theory of Optimal Utilitarian Income Taxation
Martin F. Hellwig
Max Planck Institute for Research on Collective Goods; University of Bonn - Department of Economics
MPI Collective Goods Preprint No. 2007/2
The paper provides a new formulation of the Mirrlees-Seade theorem on the positivity of the optimal marginal income tax, under weaker assumptions and in a more general model. The formulation of the theorem is independent of whether the model involves finitely many types or a continuous type distribution. The formal argument makes the underlying logic transparent, relating the mathematics to the economics and showing precisely how each assumption enters the analysis.
Note: A previous version of this paper can be found at: http://ssrn.com/abstract=869204
Number of Pages in PDF File: 60
Keywords: Optimal Income Taxation, Utilitarian Welfare Maximization, Redistribution
JEL Classification: D63, H21
Date posted: March 7, 2007
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