Indirect taxation is superfluous under separability and taste homogeneity: a simple proof

doi:10.1016/j.econlet.2004.10.010

Economics Letters

Volume 87, Issue 1, April 2005, Pages 141-144

https://doi.org/10.1016/j.econlet.2004.10.010 Get rights and content

Abstract

Indirect taxation is of no use when nonlinear income taxation is available in an economy where everyone has the same taste for goods: an elementary proof of this result, due to Atkinson and Stiglitz [Atkinson, A., Stiglitz, J., 1976. The design of tax structure: direct versus indirect taxation. Journal of Public Economics 6, 55–75.] is provided.

Résumé

Quand tous les consommateurs ont les mêmes préférences pour les biens, indépendamment de leur offre de travail, et quand l'impôt sur le revenu peut être non linéaire, la taxation indirecte est inutile. Cette note fournit une démonstration élémentaire de ce résultat du à Atkinson et Stiglitz (1976).

Section snippets

Acknowledgements

I have benefited from discussions with Stéphane Gauthier and Bernard Salanié, and from comments of Anthony Atkinson. After I had completed this note, Robin Boadway and Emmanuel Saez drew my attention to a recent paper of Kaplow (April 2004) which is based on similar ideas.

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There are more references available in the full text version of this article.

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