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The Optimal Income Tax: Restatement and Extensions

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  • Stefan Homburg

Abstract

The paper presents an axiomatic restatement of the standard approach to nonlinear income taxation. It assumes a finite number of taxpayers rather than an uncountable infinity. Analytical tools are developed which facilitate proving the existence of tax schedules that are continuous, differentiable almost everywhere, and possess left-and right-derivatives at every point of non-differentiability. These tax schedules even become differentiable in the limit. Numerical examples are provided.

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  • Stefan Homburg, 2001. "The Optimal Income Tax: Restatement and Extensions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(4), pages 363-395, November.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200211)58:4_363:toitra_2.0.tx_2-f
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    Citations

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    Cited by:

    1. Kessing, Sebastian G. & Konrad, Kai A., 2006. "Union strategy and optimal direct taxation," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 393-402, January.
    2. Robin Boadway & Zhen Song & Jean‐François Tremblay, 2017. "Optimal Income Taxation and Job Choice," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(4), pages 910-938, October.
    3. Johann K. Brunner, 2003. "Optimale direkte und indirekte Steuern bei unterschiedlicher Anfangsausstattung," Economics working papers 2003-10, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Hellwig, Martin F., 2007. "A contribution to the theory of optimal utilitarian income taxation," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1449-1477, August.
    5. Homburg Stefan & Lohse Tim, 2005. "Optimal Taxes and Transfers under Partial Information," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 225(6), pages 622-629, December.
    6. Homburg, Stefan, 2010. "Allgemeine Steuerlehre: Kapitel 1. Grundbegriffe der Steuerlehre," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 92547.
    7. Tim Lohse & Peter Lutz & Christian Thomann, 2013. "Redistributional consequences of early childhood intervention," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 373-381, June.
    8. Lohse Tim, 2009. "Redistributional Consequences of Decentralizing the Tax-Transfer Scheme," Review of Economics, De Gruyter, vol. 60(2), pages 168-180, August.
    9. Lohse Tim, 2014. "The Objections against Workfare Revised," Review of Economics, De Gruyter, vol. 65(1), pages 95-118, April.
    10. Stefan Homburg, 2006. "Coping with Rational Prodigals: A Theory of Social Security and Savings Subsidies," Economica, London School of Economics and Political Science, vol. 73(289), pages 47-58, February.
    11. Breyer, Friedrich & Franz, Wolfgang & Homburg, Stefan & Schnabel, Reinhold & Wille, Eberhard, 2004. "Reform der sozialen Sicherung: Kurzfassung," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 92399.
    12. Schock, Matthias Malte, 2019. "Steuerreformvorschläge des Mirrlees Committee und der Stiftung Marktwirtschaft [Tax Reform Proposals of the Mirrlees Committee and the Stiftung Marktwirtschaft]," MPRA Paper 96689, University Library of Munich, Germany.
    13. Kessing, Sebastian G. & Konrad, Kai A., 2005. "Union Strategy and Optimal Income Taxation," IZA Discussion Papers 1545, Institute of Labor Economics (IZA).
    14. Homburg, Stefan, 2002. "Optimal Marginal Tax Rates for Low Incomes: Positive, Negative, or Zero?," Hannover Economic Papers (HEP) dp-255, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    15. Adeel Razaq & M. Suleman Sabir & Jam Javed Iqbal & Syed Kamran Ali Shah & Muhammad Asif Khan, 2011. "Impact of CSR, Quality of Work Life and Organizational Structure on Employee’s Performance in Pakistan," Journal of Social and Development Sciences, AMH International, vol. 2(2), pages 66-72.

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D3 - Microeconomics - - Distribution

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