a) Show that the utility function of individual δ is quasi-linear.
c) Find the optimal tax rate for individual δ.
d) How does the individually optimal tax rate depend on the difference ˜L − Lδ? When does it become equal to 0? In both cases, explain.
e) What can you say about redistribution, taking into consideration that the median voter (usually "poorer" than the average) is the one that decides on the level of taxation?
f) Based on this framework, argue about a possible connection between inequality, redistribution, and official economic activity.
Last changeda year ago
