Voting over selfishly optimal nonlinear income tax schedules

Brett, Craig; Weymark, John A.

doi:10.1016/j.geb.2016.02.008

Cited by 28 publications

(51 citation statements)

References 34 publications

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“…For high skills with

w > k

, these two effects are denoted by

λ_{\underset{w}{true}} / false(1 - λ_{\underset{w}{true}} false)

and

1 / false(1 - λ_{\underset{w}{true}} false)

, respectively; for low skills with

w < k

, they are denoted by

λ_{\overset{w}{true}} / false(1 - λ_{\overset{w}{true}} false)

and

1 / false(1 - λ_{\overset{w}{true}} false)

, respectively. Both effects for high skills are greater than those for low skills. Both the highest and lowest skilled individuals face strictly positive MTRs, rather than being zero established by Brett and Weymark (2017). The MTR facing the highest type is strictly larger than that facing the lowest type.…”

Section: The Political‐economic Equilibriummentioning

confidence: 82%

“…I am in line with Brett and Weymark (2016, 2017) in terms of the underlying political economy: each individual proposes an income tax schedule that is his selfishly optimal choice and then pairwise majority voting rule is used to select the one that shall be implemented. All feasible proposals must be incentive‐compatible and satisfy the reference consumption and government budget constraints.…”

Section: The Political‐economic Equilibriummentioning

confidence: 85%

“…In addition to the before‐tax income schedule

y^{*} (\cdot)

, the bridge endpoints

\overset{w}{true}

and

\overset{w}{true}

that generally depend on the proposer's type shall be simultaneously determined. Following the same proof of Propositions 4 and 5 in Brett and Weymark (2017), I arrive at the following complete solution in which

ϕ^{normalmax *} (w, y (w), \overset{c}{true})

and

ϕ^{normalmin *} (w, y (w), \overset{c}{true})

denote, respectively, the derivatives of

G^{normalmax *} (w, y (w), \overset{c}{true})

and

G^{normalmin *} (w, y (w), \overset{c}{true})

with respect to income.…”

Section: The Political‐economic Equilibriummentioning

confidence: 86%

“…Therefore, tax formulas (16) and (17) just follow from pointwise maximization of the integrands in (14) as well as applying the definitions of MTR and labor supply elasticity given, respectively, by Equations (7) and (10). Also, the downward jump discontinuity of the before‐tax income schedule at the proposer's type

k

follows from applying the same reasoning used by Brett and Weymark (2016, 2017).…”

Section: The Political‐economic Equilibriummentioning

confidence: 90%

“…As mentioned above, the present analysis is built on the work of Brett and Weymark (2017) since the setup is similar except for a key difference: individuals' utility now depends on a reference consumption level that has to be greater than or equal to the average consumption in the population. This constraint is added to the information and budget constraints.…”

Section: Literature Reviewmentioning

confidence: 99%

See 4 more Smart Citations

Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?

Dai

2020

J Public Economic Theory

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This paper studies pairwise majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of individuals who differ in privately observable skills and make consumption comparisons, which creates a negative positional externality. It shows that the tax schedule preferred by the median skill type will win the voting contest. Given a reference consumption defined as the average consumption in the population, all skills face the same Pigouvian tax rate in the utilitarian optimum, whereas in selfish optima high skills face a Pigouvian tax rate larger than that facing low skills, generating a novel income redistributive effect. Under a constant elasticity of labor supply, two more results are obtained. First, for Pareto, Champernowne, Weibull, and lognormal skill distributions, the selfishly optimal tax schedule facing high (low) skills tends to be more progressive when the bottom‐skill's (top‐skill's) status concern intensifies. Second, it identifies the conditions under which, in the voting equilibrium, high skills face higher marginal tax rates while low skills face lower ones than what they face in the utilitarian optimum.

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“…For high skills with

w > k

, these two effects are denoted by

λ_{\underset{w}{true}} / false(1 - λ_{\underset{w}{true}} false)

and

1 / false(1 - λ_{\underset{w}{true}} false)

, respectively; for low skills with

w < k

, they are denoted by

λ_{\overset{w}{true}} / false(1 - λ_{\overset{w}{true}} false)

and

1 / false(1 - λ_{\overset{w}{true}} false)

Section: The Political‐economic Equilibriummentioning

confidence: 82%

Section: The Political‐economic Equilibriummentioning

confidence: 85%

“…In addition to the before‐tax income schedule

y^{*} (\cdot)

, the bridge endpoints

\overset{w}{true}

and

\overset{w}{true}

ϕ^{normalmax *} (w, y (w), \overset{c}{true})

and

ϕ^{normalmin *} (w, y (w), \overset{c}{true})

denote, respectively, the derivatives of

G^{normalmax *} (w, y (w), \overset{c}{true})

and

G^{normalmin *} (w, y (w), \overset{c}{true})

with respect to income.…”

Section: The Political‐economic Equilibriummentioning

confidence: 86%

k

follows from applying the same reasoning used by Brett and Weymark (2016, 2017).…”

Section: The Political‐economic Equilibriummentioning

confidence: 90%

Section: Literature Reviewmentioning

confidence: 99%

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Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?

Dai

2020

J Public Economic Theory

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show abstract

John A. Weymark

Bierbrauer

d’Aspremont²

2021

Studies in Choice and Welfare

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Majority rule and selfishly optimal nonlinear income tax schedules with discrete skill levels

Brett

Weymark

2019

Soc Choice Welf

Self Cite

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Röell (unpublished, 2012) shows that Black's Median Voter Theorem for majority voting with single-peaked preferences applies to voting over nonlinear income tax schedules that satisfy the constraints of a finite type version of the Mirrlees optimal income tax problem when voting takes place over the tax schedules that are selfishly optimal for some individual and preferences are quasilinear. An alternative way of establishing Röell's median voter result is provided that offers a different perspective on her findings, drawing on insights obtained by Brett and Weymark (GEB, 2017) in their analysis of a version of this problem with a continuum of types. In order to characterize a selfishly optimal schedule, it is determined how to optimally bunch different types of individuals.

show abstract

Voting over selfishly optimal nonlinear income tax schedules

Cited by 28 publications

References 34 publications

Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?

Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?

John A. Weymark

Majority rule and selfishly optimal nonlinear income tax schedules with discrete skill levels

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