De gustibus non est taxandum
Subtitle: heterogeneity in preferences and optimal redistribution
By: Benjamin B. Lockwood, Matthew Weinzierl
Contributors: Weinzierl, Matthew; Harvard Business School
Edition: Revised edition
Series: Working paper / Harvard Business School -- 12-063; Working paper (Harvard Business School) -- 12-063
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 27
Description: The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given mainstream functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.
Notes: "January 2012. (Updated July 2013)." -- Publisher's website.

Includes bibliographical references (pages 26-27).