The Optimal Income Tax When Poverty Is a Public "Bad"

The author considers poverty as an aggregate negative externality that affects people in different ways, depending on their aversion to poverty. If society is on average averse to poverty, then the optimal income tax schedule displays negative marg...

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Main Author:	Wane, Waly
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ASYMMETRIC INFORMATION BENCHMARK CONSUMERS CONSUMPTION FUNCTION CONSUMPTION LEVELS CUMULATIVE DISTRIBUTION CUMULATIVE DISTRIBUTION FUNCTION DENSITY FUNCTION DEVELOPMENT RESEARCH DISPOSABLE INCOME ECONOMICS LITERATURE EXPLOITATION EXTERNALITIES EXTERNALITY GINI INDEX HEADCOUNT RATIO HIGH POVERTY INCENTIVE EFFECTS INCOME INCOME POVERTY INDIFFERENCE CURVES LABOR SUPPLY LEISURE MARGINAL COST MARGINAL TAX MARGINAL TAX RATE MARGINAL TAX RATES MULTIPLIERS NEGATIVE EFFECT OPPORTUNITY COST POLICY ANALYSIS POLICY RESEARCH POOR AREAS POOR INDIVIDUALS POOR PEOPLE POOR POPULATION POSITIVE EFFECTS POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY MEASURE POVERTY MEASURES POVERTY REDUCTION PRIVATE INFORMATION PRODUCTIVITY PUBLIC FUNDS PUBLIC GOOD PUBLIC POLICY SKILLED WORKERS SOCIAL COSTS SOCIAL WELFARE TAX REFORM TAXATION UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS VALUATION WELFARE ECONOMICS WELFARE FUNCTION WORKING POOR
Online Access:	http://documents.worldbank.org/curated/en/2000/01/439012/optimal-income-tax-poverty-public-bad http://hdl.handle.net/10986/19854

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recordtype	oai_dc
spelling	okr-10986-198542021-04-23T14:03:47Z The Optimal Income Tax When Poverty Is a Public "Bad" Wane, Waly ASYMMETRIC INFORMATION BENCHMARK CONSUMERS CONSUMPTION FUNCTION CONSUMPTION LEVELS CUMULATIVE DISTRIBUTION CUMULATIVE DISTRIBUTION FUNCTION DENSITY FUNCTION DEVELOPMENT RESEARCH DISPOSABLE INCOME ECONOMICS LITERATURE EXPLOITATION EXTERNALITIES EXTERNALITY GINI INDEX HEADCOUNT RATIO HIGH POVERTY INCENTIVE EFFECTS INCOME INCOME POVERTY INDIFFERENCE CURVES LABOR SUPPLY LEISURE MARGINAL COST MARGINAL TAX MARGINAL TAX RATE MARGINAL TAX RATES MULTIPLIERS NEGATIVE EFFECT OPPORTUNITY COST POLICY ANALYSIS POLICY RESEARCH POOR AREAS POOR INDIVIDUALS POOR PEOPLE POOR POPULATION POSITIVE EFFECTS POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY MEASURE POVERTY MEASURES POVERTY REDUCTION PRIVATE INFORMATION PRODUCTIVITY PUBLIC FUNDS PUBLIC GOOD PUBLIC POLICY SKILLED WORKERS SOCIAL COSTS SOCIAL WELFARE TAX REFORM TAXATION UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS VALUATION WELFARE ECONOMICS WELFARE FUNCTION WORKING POOR The author considers poverty as an aggregate negative externality that affects people in different ways, depending on their aversion to poverty. If society is on average averse to poverty, then the optimal income tax schedule displays negative marginal tax rates, at least for less skilled individuals. Negative marginal tax rates play the role of a Pigouvian earnings subsidy, fostering the supply of poor individuals to provide labor. The result of no distortion at the endpoints, which is therefore violated, can be restored once the focus is shifted from individual to social distortions. 2014-08-28T19:43:02Z 2014-08-28T19:43:02Z 2000-01 http://documents.worldbank.org/curated/en/2000/01/439012/optimal-income-tax-poverty-public-bad http://hdl.handle.net/10986/19854 English en_US Policy Research Working Paper;No. 2270 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ASYMMETRIC INFORMATION BENCHMARK CONSUMERS CONSUMPTION FUNCTION CONSUMPTION LEVELS CUMULATIVE DISTRIBUTION CUMULATIVE DISTRIBUTION FUNCTION DENSITY FUNCTION DEVELOPMENT RESEARCH DISPOSABLE INCOME ECONOMICS LITERATURE EXPLOITATION EXTERNALITIES EXTERNALITY GINI INDEX HEADCOUNT RATIO HIGH POVERTY INCENTIVE EFFECTS INCOME INCOME POVERTY INDIFFERENCE CURVES LABOR SUPPLY LEISURE MARGINAL COST MARGINAL TAX MARGINAL TAX RATE MARGINAL TAX RATES MULTIPLIERS NEGATIVE EFFECT OPPORTUNITY COST POLICY ANALYSIS POLICY RESEARCH POOR AREAS POOR INDIVIDUALS POOR PEOPLE POOR POPULATION POSITIVE EFFECTS POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY MEASURE POVERTY MEASURES POVERTY REDUCTION PRIVATE INFORMATION PRODUCTIVITY PUBLIC FUNDS PUBLIC GOOD PUBLIC POLICY SKILLED WORKERS SOCIAL COSTS SOCIAL WELFARE TAX REFORM TAXATION UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS VALUATION WELFARE ECONOMICS WELFARE FUNCTION WORKING POOR
spellingShingle	ASYMMETRIC INFORMATION BENCHMARK CONSUMERS CONSUMPTION FUNCTION CONSUMPTION LEVELS CUMULATIVE DISTRIBUTION CUMULATIVE DISTRIBUTION FUNCTION DENSITY FUNCTION DEVELOPMENT RESEARCH DISPOSABLE INCOME ECONOMICS LITERATURE EXPLOITATION EXTERNALITIES EXTERNALITY GINI INDEX HEADCOUNT RATIO HIGH POVERTY INCENTIVE EFFECTS INCOME INCOME POVERTY INDIFFERENCE CURVES LABOR SUPPLY LEISURE MARGINAL COST MARGINAL TAX MARGINAL TAX RATE MARGINAL TAX RATES MULTIPLIERS NEGATIVE EFFECT OPPORTUNITY COST POLICY ANALYSIS POLICY RESEARCH POOR AREAS POOR INDIVIDUALS POOR PEOPLE POOR POPULATION POSITIVE EFFECTS POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY MEASURE POVERTY MEASURES POVERTY REDUCTION PRIVATE INFORMATION PRODUCTIVITY PUBLIC FUNDS PUBLIC GOOD PUBLIC POLICY SKILLED WORKERS SOCIAL COSTS SOCIAL WELFARE TAX REFORM TAXATION UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS VALUATION WELFARE ECONOMICS WELFARE FUNCTION WORKING POOR Wane, Waly The Optimal Income Tax When Poverty Is a Public "Bad"
relation	Policy Research Working Paper;No. 2270
description	The author considers poverty as an aggregate negative externality that affects people in different ways, depending on their aversion to poverty. If society is on average averse to poverty, then the optimal income tax schedule displays negative marginal tax rates, at least for less skilled individuals. Negative marginal tax rates play the role of a Pigouvian earnings subsidy, fostering the supply of poor individuals to provide labor. The result of no distortion at the endpoints, which is therefore violated, can be restored once the focus is shifted from individual to social distortions.
format	Publications & Research :: Policy Research Working Paper
author	Wane, Waly
author_facet	Wane, Waly
author_sort	Wane, Waly
title	The Optimal Income Tax When Poverty Is a Public "Bad"
title_short	The Optimal Income Tax When Poverty Is a Public "Bad"
title_full	The Optimal Income Tax When Poverty Is a Public "Bad"
title_fullStr	The Optimal Income Tax When Poverty Is a Public "Bad"
title_full_unstemmed	The Optimal Income Tax When Poverty Is a Public "Bad"
title_sort	optimal income tax when poverty is a public "bad"
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2000/01/439012/optimal-income-tax-poverty-public-bad http://hdl.handle.net/10986/19854
_version_	1764441838410792960

The Optimal Income Tax When Poverty Is a Public "Bad"

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