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Citizen Candidates and Voting Over Incentive-Compatible Nonlinear Income Tax Schedules

Author

Listed:
  • Craig Brett

    (Mount Allison University)

  • John A Weymark

    (Vanderbilt University)

Abstract

Majority voting over the nonlinear tax schedules proposed by a continuum of citizen candidates is considered. The analysis extends the finite-individual model of Röell (unpublished manuscript, 2012). Each candidate proposes the tax schedule that is utility maximal for him subject to budget and incentive constraints. Each of these schedules is a combination of the maxi-min and maxi-max schedules along with a region of bunching in a neighborhood of the proposer's type. Techniques introduced by Vincent and Mason (1967, NASA Contractor Report CR-744) are used to identify the bunching region. As in Röell's model, it is shown that individual preferences over these schedules are single-peaked, so the median voter theorem applies. In the majority rule equilibrium, marginal tax rates are negative for low-skilled individuals and positive for high-skilled individuals except at the endpoints of the skill distribution where they are typically zero.

Suggested Citation

  • Craig Brett & John A Weymark, 2014. "Citizen Candidates and Voting Over Incentive-Compatible Nonlinear Income Tax Schedules," Vanderbilt University Department of Economics Working Papers 14-00010, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-14-00010
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    More about this item

    Keywords

    bunching; citizen candidates; ironing; majority voting; nonlinear income taxation;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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