Optimality Conditions and Comparative Static Properties of Optimal Nonlinear Income Taxes Revisited Laurent

Comparative static properties of the optimal Mirrleesian nonlinear income tax are ob-tained for a nite population and quasilinear in consumption preferences. Contrary to Wey-mark (1987) who considers quasilinear in leisure preferences, the linearity with respect to the variable observed by the government and used as a tax base is lost. A reduced-form op-timal income tax problem is derived, in which consumption levels are obtained as functions of gross incomes. The contribution of this new reduced form is twofold. First, the optimal allocation can be characterized geometrically in a simple way. Second, comparative static results with respect to individual productivities are easy to obtain