Optimal nonlinear income taxation with productive government expenditure

2012 ◽  
Vol 22 (1) ◽  
pp. 66-77 ◽  
Author(s):  
Ching-Chong Lai ◽  
Chih-Hsing Liao
Keyword(s):  
Government Expenditure ◽  
Income Taxation ◽  
Productive Government Expenditure ◽  
Nonlinear Income Taxation

Macroeconomic (in)stability and endogenous market structure with productive government expenditure

2017 ◽  
Vol 21 (2) ◽  
Author(s):  
Cheng-Wei Chang ◽  
Ching-Chong Lai
Keyword(s):  
Government Spending ◽  
Monopolistic Competition ◽  
Government Expenditure ◽  
Returns To Scale ◽  
Production Externalities ◽  
Congestion Effect ◽  
Local Indeterminacy ◽  
Endogenous Market Structure ◽  
Productive Government Spending ◽  
Productive Government Expenditure

AbstractWe consider the congestion effect of productive government spending in a monopolistic competition model with endogenous entry, and analyze the possibility of local indeterminacy. Some main findings emerge from the analysis. First, the indeterminacy condition is independent of the monopoly power. Second, productive government expenditure can be a source of local indeterminacy, while a higher degree of public goods congestion lessens the beneficial effect of productive government expenditure, and therefore reduces the possibility of indeterminacy. Third, a higher degree of internal returns to scale is associated with a lower possibility for the emergence of indeterminacy when production externalities are present.

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)

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