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A Contribution to the Theory of Optimal Utilitarian Income Taxation

60 Pages Posted: 7 Mar 2007  

Martin F. Hellwig

Max Planck Institute for Research on Collective Goods; University of Bonn - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2007

Abstract

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.

Notes: A previous version of this paper can be found at: http://ssrn.com/abstract=869204

Keywords: Optimal Income Taxation, Utilitarian Welfare Maximization, Redistribution

JEL Classification: D63, H21

Suggested Citation

Hellwig, Martin F., A Contribution to the Theory of Optimal Utilitarian Income Taxation (February 2007). MPI Collective Goods Preprint No. 2007/2. Available at SSRN: https://ssrn.com/abstract=968643 or http://dx.doi.org/10.2139/ssrn.968643

Martin F. Hellwig (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Bonn - Department of Economics

Adenauerallee 24-42
D-53113 Bonn
Germany

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