Essays on income taxation

This is a dissertation in Public Finance, composed of four independent yet related essays. The essays use the framework provided by the optimal non-linear income tax model of Mirrlees (1971) as a departure point to study the role of incentive compatibility, equity and politics in the design of income tax structures. The first purpose of this research program is to improve our knowledge of the properties of the income tax model by relying on techniques developed in the incentive compatibility literature, so that a few more steps are taken to increase the usefulness of the model as a tool for policy analysis. The first essay studies the implementation of revenue requirement functions, mapping from unobservable abilities to tax payments, by means of a tax on income, which can be monitored by the social planner.;The focus on the incentive compatibility aspect of the optimal income tax model allows the use of a more general modeling strategy, one in which it becomes possible to design tax functions that implement criteria not amenable to formalization as individualistic social welfare functions, the case usually discussed in the existing literature. One interesting example is the case of equal sacrifice taxes, a time-honored equity criterion in the Public Finance literature. Will the classical results survive the introduction of incentives in the problem? How do equal sacrifice and incentive compatible income taxes compare with optimal income taxes? These are some of the questions addressed in the second essay.;The second fundamental purpose of the thesis has a more positive nature and consists of modeling general (i.e. non-linear) tax structures as the outcome of a politico-economic process. This task is made possible by the previous essays, which enable a substantial simplification of the analytics of the problem, thus generating the possibility that meaningful results be obtained.;Can we find reasonable conditions for existence of an equilibrium in a model with voting over income taxes? Once existence is studied, can we characterize the outcomes? The third essay attempts to answer such questions.;In a natural sequence of the research program adopted, an empirical investigation is in order. The fourth essay is an econometric inquiry on the nature of actual tax structures. The goal is to characterize the existing empirical relation between effective federal income taxes and income. This will lay the foundation for a future evaluation of the relevance and predictive power of hypotheses based on the alternative paradigms existing in the literature, with emphasis on those formalized in the theoretical analysis discussed in the previous essays.