When the Joneses' consumption hurts: Optimal public good provision and nonlinear income taxation

• 成果类型: Article
• 署名作者: Aronsson, Thomas; Johansson-Stenman, Olof
• 署名单位: Umea University; University of Gothenburg
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.12.007
• 发表日期: 2008
• 页码: 986-997
• 关键词: Optimal taxation; redistribution; public goods; relative consumption; status; positional goods

摘要

This paper considers a model with nonlinear income taxation and public good provision when people care about their relative consumption compared to others. The standard optimality expressions are modified by terms that reflect the extent to which people care about relative consumption. 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, under plausible assumptions and available empirical estimates regarding comparison consumption concerns. (C) 2007 Elsevier B.V. All rights reserved.