Public Goods, Self-Selection and Optimal Income Taxation

Using the self-selection approach to tax analysis, this paper derives a modified Samuelson Rule for the provision of public goods when the government deploys an optimal nonlinear income tax. This approach gives a straightforward interpretation of the central result in this area, generalises it, and...

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Bibliographic Details
Published in:International economic review (Philadelphia) 1993-08, Vol.34 (3), p.463-478
Main Authors: Boadway, Robin, Keen, Michael
Format: Article
Language:English
Subjects:
Commodities
Consumer goods
Economic models
Fiscal policy
Government spending
Income tax
Income taxes
Labor supply
Non-linear models
Optimal taxation
Pigouvian taxes
Private goods
Public goods
Recreation
Studies
Taxation
Utility functions
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Summary:Using the self-selection approach to tax analysis, this paper derives a modified Samuelson Rule for the provision of public goods when the government deploys an optimal nonlinear income tax. This approach gives a straightforward interpretation of the central result in this area, generalises it, and provides a simple characterisation of optimal policy in a wide range of circumstances. The analysis also emphasises and clarifies the significance of the choice of numeraire for the optimality of "decentralising" public spending decisions.
ISSN:0020-6598
1468-2354
DOI:10.2307/2527177