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Craig Brett and John A Weymark
''Citizen Candidates and Voting Over Incentive-Compatible Nonlinear Income Tax Schedules''
Majority voting over the nonlinear tax schedules proposed by a continuum of citizen candidates is considered. The analysis extends the finite-individual model of Röell (unpublished manuscript, 2012). Each candidate proposes the tax schedule that is utility maximal for him subject to budget and incentive constraints. Each of these schedules is a combination of the maxi-min and maxi-max schedules along with a region of bunching in a neighborhood of the proposer's type. Techniques introduced by Vincent and Mason (1967, NASA Contractor Report CR-744) are used to identify the bunching region. As in Röell's model, it is shown that individual preferences over these schedules are single-peaked, so the median voter theorem applies. In the majority rule equilibrium, marginal tax rates are negative for low-skilled individuals and positive for high-skilled individuals except at the endpoints of the skill distribution where they are typically zero.
Keywords: bunching, citizen candidates, ironing, majority voting, nonlinear income taxation
JEL: H2 - Taxation, Subsidies, and Revenue: General
D7 - Analysis of Collective Decision-Making: General
Manuscript Received : Sep 26 2014 Manuscript Accepted : Sep 26 2014

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