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Author: | Aronsson, T. Johansson-Stenman, O. |
Title: | When the Joneses' consumption hurts: Optimal public good provision and nonlinear income taxation |
Journal: | Journal of Public Economics
2008 : JUN, VOL. 92:5-6, p. 986-997 |
Index terms: | taxation incomes consumption public goods models |
Freeterms: | redistribution |
Language: | eng |
Abstract: | This paper presents a model with non-linear income taxation and public good provision when people care about their relative consumption (herein as: r-c.) compared to others. The standard optimality expressions are modified by terms reflecting the extent to which people care about r-c. The extent to which the public good provision rule should be modified is shown to depend critically on the preference elicitation format. The modified tax formulas imply substantially higher marginal income tax rates than in the conventional case etc. |
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