Supplementary Commodity Taxes, Labor Tax on the Middle Class, and the Tax-mix

Nishimura, Yukihiro

Discussion Papers In Economics And Business, 2025, 25-08, 1-27

Number of Access:21（2025-10-10 20:18 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/102580

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Title
Supplementary Commodity Taxes, Labor Tax on the Middle Class, and the Tax-mix
Creator
NRID
1000090345471 1000090345471
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Scopus Author ID
7403347968 7403347968
CreatorName
Nishimura, Yukihiro
Subject
Commodity tax
Income tax
Marginal income tax rates
JEL
H21
H24
D63
Abstract
Given that the incentive consideration reduces the scope for redistribution, Mirrlees (1976, Optimal tax theory: a synthesis. Journal of Public Economics 6, 327‒358) emphasized the redistributive effects of commodity taxes (which include capital income tax), which reduces the effective tax wedge on labor income. We revert to the unidimensional case to show that the optimal labor wedge can become higher after the introduction of the optimal commodity taxes/subsidies when labor complements are subsidized. This is partly because supplementary commodity taxes are not increasing in ability as Mirrlees (1976) thought. Among the classic results, decreasing marginal taxes on the middle class,including the mode of the income distribution, remains valid with commodity taxes and without separability in the utility function.
Publisher
Graduate School of Economics, The University of Osaka
Source Title
Discussion Papers In Economics And Business
Volume (Issue)
25-08
Page
1-27
Date of Issued
2025-08
Language
English
Handle URL
https://hdl.handle.net/11094/102580
Relation.references
URI
https://www2.econ.osaka-u.ac.jp/econ_society/dp/2508.pdf
Access Rights
metadata only access
Category
ディスカッション／ワーキング・ペーパー DP/WP
Discussion Papers In Economics And Business