Title

On the sign of the optimum marginal income tax

Document Type

Journal article

Source Publication

Review of Economic Studies

Publication Date

10-1-1982

Volume

49

Issue

4

First Page

637

Last Page

643

Abstract

This paper studies a central aspect of optimal income taxation as modelled in Mirrlees' original paper on the topic (identical leisure/consumption preferences, qualitatively homogeneous "skills" in production), namely, whether given concave utilitarianism alone the optimal marginal income tax will be non-negative. A well-known positive answer to this question (in weak inequality form) was given in the said paper which, however, we show requires additive separability of individual utility (in the ordinal and cardinal senses). Our main result here is to derive the required (strict) positivity of the marginal tax under weak conditions, slightly wider than noninferiority of consumption and leisure, with preferences otherwise arbitrary.

DOI

10.2307/2297292

Print ISSN

00346527

E-ISSN

1467937X

Publisher Statement

Copyright © 1982 The Society for Economic Analysis Limited

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Recommended Citation

Seade, J. (1982). On the sign of the optimum marginal income tax. Review of Economic Studies, 49(4), 637-643. doi: 10.2307/2297292