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Optimal Piecewise Linear Income Taxation

Apps, Patricia; Long, Ngo; Rees, Ray

Description

Given its significance in practice, piecewise linear taxation has received relatively little attention in the literature. This paper offers a simple and transparent analysis of its main characteristics. We fully characterize optimal tax parameters for the cases in which budget sets are convex and nonconvex respectively. A numerical analysis of a discrete version of the model shows the circumstances under which each of these cases will hold as a global optimum. We find that, given plausible...[Show more]

CollectionsANU Research Publications
Date published: 2014
Type: Journal article
URI: http://hdl.handle.net/1885/56896
Source: Journal of Public Economic Theory
DOI: 10.1111/jpet.12070

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