Public investment criteria under optimal nonlinear income taxation without commitment

2021 ◽  
Author(s):  
Shigeo Morita ◽  
Takuya Obara
Keyword(s):  
Public Investment ◽  
Income Taxation ◽  
Nonlinear Income Taxation

scholarly journals A Positive Theory of Income Taxation

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Oriol Carbonell-Nicolau
Keyword(s):  
Electoral Competition ◽  
Income Redistribution ◽  
Competition Model ◽  
Income Taxation ◽  
Tax Policies ◽  
Positive Theory ◽  
Income Distributions ◽  
Income Groups ◽  
Dynamic Version ◽  
Nonlinear Income Taxation

We explore the consequences of electoral competition for nonlinear income taxation. Our model is a dynamic version of the standard two-party electoral competition model adapted to nonlinear income taxation. The theory has a number of desirable features. First, equilibria always exist, even though the set of admissible tax policies is multidimensional. Second, the Nash set can be characterized generically, and its components give sharp predictions. Third, the features of equilibrium tax policies depend only on empirically meaningful fundamentals.Equilibrium tax schedules benefit the more numerous income groups and place the burden of taxation on income groups with fewer voters. For empirical income distributions, the features of an equilibrium tax schedule are reminiscent of Director's law of public income redistribution (Stigler [39]).

scholarly journals Market Power and Income Taxation

2021 ◽  
Vol 13 (4) ◽  
pp. 329-354
Author(s):  
Louis Kaplow
Keyword(s):  
Labor Supply ◽  
Market Power ◽  
Weighted Average ◽  
Income Taxation ◽  
Policy Rule ◽  
Endogenous Labor Supply ◽  
Downward Shift ◽  
Producer Surplus ◽  
Endogenous Labor ◽  
Nonlinear Income Taxation

This article analyzes concerns about market power and inequality in a model with multiple sectors, heterogeneous abilities, endogenous labor supply, and nonlinear income taxation. Proportional markups with no profit dissipation have no effect on the economy, and a policy that reduces a nonproportional markup raises (lowers) welfare when it is higher (lower) than a weighted average of other markups. With proportional (partial or full) profit dissipation, proportional markups are equivalent to a downward shift of the distribution of abilities, and the optimal policy rule with nonproportional markups maximizes consumer plus producer surplus despite concerns for distribution and labor supply distortion. (JEL D43, D61, H21, H23, H24, K21, L13, L40)

scholarly journals Public Investment, Government Indebtedness and Transitional Dynamics

2018 ◽  
Vol 10 (2) ◽  
pp. 121-150
Author(s):  
Constantine Angyridis ◽  
Panagiotis Tsintzos
Keyword(s):  
Growth Models ◽  
Public Investment ◽  
Income Taxation ◽  
Fiscal Rules ◽  
Aggregate Fluctuations ◽  
Endogenous Growth Model ◽  
The Government ◽  
Progressive Income Taxation ◽  
Unstable Dynamics

This paper considers an endogenous growth model with public capital and government debt. In setting the level of public investment each period, the government is assumed to follow two commonly used in the growth literature fiscal rules: public investment is either equal to a constant fraction of output or equal to a constant share of tax revenues. In our model, we allow revenues to be raised by the government through progressive income taxation and bonds issue. For both fiscal rules, we show that the potential occurrence of either indeterminacy or instability crucially depends on whether the government is a debtor or a creditor. In particular, government indebtedness causes the economy to be prone to either belief-driven aggregate fluctuations or unstable dynamics. This is a novel result in the related literature which has largely overlooked the role of public debt as a possible contributing factor to the presence of indeterminacy and instability in growth models.

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