TY  - JOUR
AU  - Saez,Emmanuel
TI  - The Desirability of Commodity Taxation under Non-Linear Income Taxation and Heterogeneous Tastes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8029
PY  - 2000
Y2  - December 2000
UR  - http://www.nber.org/papers/w8029
L1  - http://www.nber.org/papers/w8029.pdf
N1  - Author contact info:
Emmanuel Saez
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-4631
Fax: 510/642-6615
E-Mail: saez@econ.berkeley.edu
AB  - This paper revisits the Atkinson-Stiglitz result on uselessness of commodity taxation in the presence of optimal non-linear income taxation in a more general setup, namely when tastes are heterogeneous.  This general analysis displays the key economic assumptions under which the Atkinson-Stiglitz result is robust. A small tax on a given commodity is desirable if high income earners have a relatively higher taste for this commodity or if consumption of this commodity increases with leisure.  An application to the case of savings suggests that, even in the presence of optimal non-linear earnings taxation, there is a role for a supplemental capital income tax in the standard overlapping generation model.
ER  -