SFB 303 Discussion Paper No. A - 323

Author: Nett, Lorenz, and Wolfgang Peters
Title: Voluntary Provision of Public Goods and Non-Neutral Income Taxation
Abstract: This paper analyzes the influence of income taxation on the voluntary provision of public goods. Besides a qualitative characterization of the equilibrium, Pareto improving income taxes are analyzed. We compare the extent of public good supply in the case of second best welfare optima in the non-competitive and the competitive case to the first best Samuelson rule. Simulation studies illustrate the comparative static analysis of the equilibrium if the tax rate increases, especially with respect to voluntary individual contributions. Other results demonstrate that the Rawlsian criterion in the non-competitive tax case may lead to lower tax rates than the utilitarian one. Additionally equitability as defined by Varian is not fulfilled for any income tax.
Keywords:
JEL-Classification-Number: 024, 324, 022
Creation-Date: October 1990
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