Template-Type: ReDIF-Paper 1.0
Title: Income taxation and production efficiency in a simple two-sector economy
Author-Name: Thomas Gaube
Author-Email: thomas.gaube@wiwi.uni-bonn.de
Classification-JEL: H21, H23
Keywords: income taxation, production efficiency
Abstract: In a recent contribution, H. Naito (1999) has shown that production 
	efficiency may be violated in the optimum with non-linear income taxation. 
	Using a slightly simpler framework, this paper complements Naito's analysis 
	in showing that production efficiency does not hold in the optimum with (i) 
	non-linear and (ii) linear income taxation provided that second best and 
	first best do not coincide. These findings indicate that income taxation 
	generally implies the desirability to complement the distortion between 
	consumer and producer prices by means of a corresponding distortion in input 
	prices.
Note: 
Length: 18
Creation-Date: 2000-10 
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse14_2000.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse14_2000