You are not currently logged in.
Access JSTOR through your library or other institution:
The Pareto-Frontier in a Simple Mirrleesian Model of Income Taxation
Felix J. Bierbrauer and Pierre C. Boyer
Annals of Economics and Statistics
No. 113/114, SPECIAL ISSUE ON THE ECONOMICS OF TAXATION (June 2014), pp. 185-206
Stable URL: http://www.jstor.org/stable/10.15609/annaeconstat2009.113-114.185
Page Count: 22
You can always find the topics here!Topics: Income taxes, Taxation, Tax incentives, Marginal tax rate, Income statistics, Economic models, Statistical models, Economic utility, Marginal utility, Revenue
Were these topics helpful?See somethings inaccurate? Let us know!
Select the topics that are inaccurate.
Preview not available
We characterize the Pareto-frontier in a simple Mirrleesian model of income taxation. We show how the second-best frontier, which incorporates incentive constraints due to private information on productive abilities, relates to the first-best frontier, which takes only resource constraints into account. In particular, we argue that the second-best frontier can be interpreted as a Laffer-curve. We also use this second-best frontier for a comparative statics analysis of how optimal income tax rates vary with the degree of inequity aversion, and for a characterization of optimal public-good provision. We show that a more inequity-averse policy maker chooses tax schedules that are more redistributive and involve higher marginal tax rates, while simultaneously providing less public goods. JEL: H21, H41, D82. / KEY WORDS: Optimal Income Taxation, Laffer-Curve, Public-Good Provision.
© ANNALS OF ECONOMICS AND STATISTICS