Public Good Provision and the Comparative Statics
of Optimal Nonlinear Income Taxation


Working Paper No. 04-W15R

Craig Brett and John A. Weymark



ABSTRACT [article]



Comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs an income tax schedule for redistributive purposes and provides a public good optimally. There are two types of individuals, distinguished by their skill levels, who have the same quasilinear preferences for labour supply and the consumption of a private and a public good. The parameters for which comparative statics are obtained are the weights in a weighted utilitarian social welfare function, the prices of the private and public goods, a taste parameter that measures the onerousness of working, and the individual skill levels.

Keywords and Phrases: Optimal income taxation, public goods, comparative statics

JEL Classification Numbers: D82, H21, H41


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