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Optimal income tax in the presence of status effects
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UNSPECIFIED (2001) Optimal income tax in the presence of status effects. JOURNAL OF PUBLIC ECONOMICS, 81 (2). pp. 193-212. ISSN 0047-2727.
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Abstract
The existence of distortions from individuals competing to attain social status by using consumption signals justifies some measure of income tax as a counter-acting distortion. The question posed here is whether it also constitutes a reason for a more progressive income tax schedule. The answer is found to be broadly negative if progressiveness is interpreted as a more convex tax schedule, unless the rich are more concerned with status-seeking than the poor. On the other hand, status-seeking makes the optimal tax schedule steeper so that redistribution is increased. Essentially, the analysis of status-seeking based on a signaling approach confirms and strengthens the existing view of an optimal tax schedule, and can be incorporated into the Diamond [American Economic Review 88 (1998) 83-95] approach. (C) 2001 Elsevier Science B.V. All rights reserved.
Item Type: | Journal Article | ||||
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Subjects: | H Social Sciences > HC Economic History and Conditions | ||||
Journal or Publication Title: | JOURNAL OF PUBLIC ECONOMICS | ||||
Publisher: | ELSEVIER SCIENCE SA | ||||
ISSN: | 0047-2727 | ||||
Official Date: | August 2001 | ||||
Dates: |
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Volume: | 81 | ||||
Number: | 2 | ||||
Number of Pages: | 20 | ||||
Page Range: | pp. 193-212 | ||||
Publication Status: | Published |
Data sourced from Thomson Reuters' Web of Knowledge
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