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Optimal capital income taxation in the case of private donations to public goods

Author

Listed:
  • Shigeo Morita

    (Osaka University)

  • Takuya Obara

    (Hitotsubashi University)

Abstract

In this study, we investigate optimal nonlinear labor and capital income taxation and subsidies for contribution goods in a dynamic setting. We show that when individuals can contribute to a public good--even if additive and separable preference between consumption and labor supply is assumed and individuals differ only in earning ability--marginal capital income tax rate for low-income earners is not zero, indicating that the Atkinson-Stiglitz theorem does not hold.

Suggested Citation

  • Shigeo Morita & Takuya Obara, 2018. "Optimal capital income taxation in the case of private donations to public goods," Economics Bulletin, AccessEcon, vol. 38(2), pages 921-939.
    • Handle: RePEc:ebl:ecbull:eb-17-00441
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Capital income tax; Private donations; Tax treatment;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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