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- Title
On the Existence of an Optimal Income Tax Schedule.
- Authors
Kaneko, Mamoru
- Abstract
This article focuses on the existence of an optimal income tax schedule. In this paper, the author models the optimal taxation problem in the context of general equilibrium analysis. He considers an economy with a finite number of individuals, a finite number of firms and a government, where a finite number of consumption goods and one public good are produced by the firms and the government respectively using labour as input. An optimal tax schedule means one which gives a competitive equilibrium with the maximum value of a social welfare function. Thus the model of this paper is much wider than those of the preceding works, though this paper concerns only the existence of an optimal tax schedule in an economy with a finite number of individuals. The existence problem in an economy with a continuum of individuals is important for the further consideration of the shape of an optimal tax schedule, because tax rates or disposable incomes of rich individuals can be considered naturally in such a model.
- Subjects
INCOME tax; TAXATION; DIRECT taxation; ECONOMIC equilibrium; SOURCE rules; INCOME averaging; INCOME tax deductions
- Publication
Review of Economic Studies, 1981, Vol 48, Issue 4, p633
- ISSN
0034-6527
- Publication type
Article
- DOI
10.2307/2297202