Such preferences include the case of homothetic separability, for which Engel curves pass through the origin. In answer to the first question, a sufficient condition for the optimality of uniform commodity taxes or, equivalently, taxes only on labor income, is that preferences are weakly separable into goods and leisure, and that commodities have linear Engel curves with identical slopes across households 17. ![]() First, when will the government wish to use the commodity tax θ 2 or, for the case of several commodities 1, …, N, the commodity taxes θ 2, …, θ N? Second, under what conditions will the income tax be progressive, with average tax rates rising with income (e.g., with T < 0)? As Equation (4.1) shows, the government has the option of using differential commodity taxation to supplement the linear income tax schedule. Where τ = − θ 0/(1 − θ 0) is the household’s marginal income tax rate.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |