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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2005:20:
Nonlinear Income Taxes and the Utility Possibility Set

Tommy Andersson ()

Abstract: This article analyzes constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left. It is demonstrated that as long as all individuals have a positive consumption at the tax schedule that maximizes the utility of the worst-off individual, the constrained utility possibility set is convex. As a consequence, all constrained Pareto efficient nonlinear income tax schedules that are monotonic chains to the left can be identified by maximizing a weighted summation of net utilities.

Keywords: Nonlinear income taxation; Utility possibility set; Convexity; (follow links to similar papers)

JEL-Codes: H21; (follow links to similar papers)

9 pages, March 4, 2005, Revised September 28, 2006

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This paper is published as:
Andersson, Tommy, (2007), 'A Note on Nonlinear Income Taxes and the Utility Possibility Set', Economics Bulletin, Vol. 8, No. 5, pages 1-8



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