Optimal nonlinear income taxation with a finite population. (English) Zbl 1142.91687
Summary: In the standard optimal income taxation problem, tax payments depend only on each consumer’s own actions. T. Piketty [J. Econ. Theory 61, No. 1, 23–41 (1993; Zbl 0779.90023)] showed that, if one individual’s tax schedule depends on others’ actions and the government knows the exact ability distribution, it can implement any undistorted allocation as the unique revelation game outcome. If some individuals misreveal their types, Piketty’s mechanism may assign infeasible allocations. We require that tax schedules must balance the government budget for every possible vector of revelations. When individuals reveal their type by simple announcements, all undistorted allocations can be still implemented, even with off-equilibrium feasibility constraints.
MSC:
| 91B64 | Macroeconomic theory (monetary models, models of taxation) |
| 91A80 | Applications of game theory |
Citations:
Zbl 0779.90023References:
| [1] | Brito, D.; Hamilton, J.; Slutsky, S.; Stiglitz, J., Pareto efficient tax schedules, Oxford Econ. Pap., 42, 61-77 (1990) |
| [2] | Clarke, E., Multipart pricing of public goods, Public Choice, 11, 17-33 (1971) |
| [3] | Groves, T., Incentives in teams, Econometrica, 41, 617-663 (1973) · Zbl 0311.90002 |
| [4] | Groves, T.; Ledyard, J., Optimal allocation of public goods: a solution to the “free rider” problem, Econometrica, 45, 783-809 (1977) · Zbl 0363.90015 |
| [5] | Guesnerie, R., A Contribution to the Pure Theory of Taxation (1995), Cambridge University Press: Cambridge University Press Cambridge, UK · Zbl 0841.90055 |
| [6] | J. Hamilton, S. Slutsky, Partial commitment in optimal nonlinear income taxation, http://bear.cba.ufl.edu/hamilton/working.html; J. Hamilton, S. Slutsky, Partial commitment in optimal nonlinear income taxation, http://bear.cba.ufl.edu/hamilton/working.html |
| [7] | Hammond, P., Straightforward incentive compatibility in large economies, Rev. Econ. Stud., 46, 263-282 (1979) · Zbl 0409.90019 |
| [8] | Mirrlees, J., An exploration in the theory of optimal income taxation, Rev. Econ. Stud., 38, 175-208 (1971) · Zbl 0222.90028 |
| [9] | Piketty, T., Implementation of first-best allocations via generalized tax schedules, J. Econ. Theory, 61, 23-41 (1993) · Zbl 0779.90023 |
| [10] | Stiglitz, J., Self-selection and Pareto efficient taxation, J. Public Econ., 17, 213-240 (1982) |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
