Optimal linear commodity taxation under optimal non-linear income taxation

• Published in: Journal of public economics Vol. 117; pp. 201 - 210
• Main Authors: Jacobs, Bas, Boadway, Robin
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.09.2014
• Subjects: Atkinson–Stiglitz theorem; Commodities; Earnings; Empirical research; Income; Income tax; Labour supply; Optimal linear and non-linear indirect taxation; Optimal non-linear income taxation; Taxation; Taxes; H2; Optimal non-linear income taxation; Atkinson–Stiglitz theorem; Optimal linear and non-linear indirect taxation

This paper analyzes optimal linear commodity taxes joint with non-linear income taxes. We provide optimal tax rules based on empirically observable elasticities, earnings and commodity demands. We demonstrate that commodities should be taxed/subsidized if – conditional on earnings – doing so boosts...