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Tommy Andersson

"A Note on Nonlinear Income Taxes and the Utility Possibility Set "

(2007, Vol. 8, No. 5.)

 
 
This note analyzes constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left. The main result demonstrates that if all individuals have a positive consumption at the tax schedule that maximizes the utility of the worst-off individual, then the constrained utility possibility set is convex. As a consequence, all constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left can be identified by maximizing a weighted summation of net utilities.
 
 
Keywords :
 
Convexity, Nonlinear income taxation, Utility possibility set
 
 
Manuscript Received : 2/28/2007   Manuscript Accepted : 5/29/2007
 
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