This thesis presents an analysis of two classical problems in the theory of optimal
taxation: commodity tax reform and nonlinear income taxation. Economic behavior is
modeled as arising out of a family decision making process rather than owing to individual
utility maximization. The taxation authority is assumed to have no direct control over
intra-family allocations of ^resources. In this way, family interactions change the nature
of the second-best constraints the planner faces. The analysis focuses on the impact of
these constraints on optimal policy choices. Attention is focused on families with two
members, whom the planner can (in most situations that are modeled) tell apart.
In the chapters dealing with commodity tax reform, behaviour is modeled as the
Pareto-efficient outcome of a family decision process. Conditions for the existence of
a feasible, Pareto-improving tax change are presented and contrasted with those that
obtain in the individualistic case. The consequences of treating households as a single
individual are also discussed. It is shown that treating families as if they were individuals
can lead to misleading conclusions. An example is presented to demonstrate that the
traditional analysis may go wrong even when families behave as if they are individuals.
Moreover, it is shown that household budget data alone is insufficient to address this
issue. The model is then put to use to address question of temporary inefficiencies in tax
reform. I present how the circumstances under which temporary inefficiencies can arise
vary with the structure of poll taxes.
The problem faced by a planner choosing an income tax schedule for families is
modeled as a multi-dimensional screening problem. Families are described by a two-dimensional
vector of characteristics, interpreted as the labour productivities of their
members. The planner cannot observe these characteristics directly. Furthermore, families
are free to redistribute the after-tax incomes of their members. The planner must take
this behaviour into account when choosing the tax schedule. A description of the possible
Pareto-efficient mechanisms is given. The implications of a standard redistributive
assumption on the sign of marginal tax rates are explored. In contrast to uni-dimensional
taxation models, the redistributive assumption does not imply that marginal tax
rates are everywhere non-negative. For much of the analysis, the usual assumption of
quasi-linear preferences is jettisoned, allowing an exploration of the implications of this
additional structure. The qualitative features of optimal tax- schedules are discussed. It
is concluded that neither individual-based taxation nor taxation based solely on total
family income is optimal.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:BVAU.2429/6259 |
| Date | 11 1900 |
| Creators | Brett, Craig |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Relation | UBC Retrospective Theses Digitization Project [http://www.library.ubc.ca/archives/retro_theses/] |
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