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