In:
Journal of Public Economic Theory, Wiley, Vol. 16, No. 6 ( 2014-12), p. 936-958
Abstract:
This paper studies the optimal tax mix (taxes on income and commodities) under asymmetric information in a two‐type model, when individuals make relative consumption comparisons. The model includes both positional and nonpositional goods, taking into account the fact that relative concerns matter for some but not for all commodities. We find that in general the whole tax system is affected by the externalities caused by the consumption of positional goods, notably also the taxes on income and on a nonpositional good. The tax rates on positional goods are higher than in the absence of status effects, reflecting their Pigouvian role. The sign of the Pigouvian part in the income tax schedule is ambiguous and depends crucially on whether status goods are complements or substitutes to leisure.
Type of Medium:
Online Resource
ISSN:
1097-3923
,
1467-9779
DOI:
10.1111/jpet.2014.16.issue-6
Language:
English
Publisher:
Wiley
Publication Date:
2014
detail.hit.zdb_id:
1478348-4
