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Collectively Incentive Compatible Tax Systems

Author

Listed:
  • Felix Bierbrauer

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract
This paper assumes that individuals possess private information both about their abilities and about their valuation of a public good. Individuals can undertake collective actions on order to manipulate the tax system and the decision on public good provision. Consequently, an implementable scheme of taxation has to be collectively incentive compatible. If preferences are additively separable, then an implementable tax systems has the following properties: (i) tax payments do not depend on public goods preferences and (ii) there is no scope for a collective manipulation of public goods preferences. For a quasilinear economy, the optimal tax system is explicitly characterized.

Suggested Citation

  • Felix Bierbrauer, 2006. "Collectively Incentive Compatible Tax Systems," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2006_24, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2006_24
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    References listed on IDEAS

    as
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    20. Felix Bierbrauer, 2005. "Optimal Income Taxation and Public Good Provision in a Two-Class Economy," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2005_25, Max Planck Institute for Research on Collective Goods.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Optimal Taxation; Public Good Provision; Revelation of Preferences; Information Aggregation;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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