Optimal redistribution and needs

摘要: The income tax-transfer system is the most important policy instrument that government uses to achieve society’s redistributive goals. It has been long recognized imperfect since in process of transferring from better — off less well-off members society, efforts households—both better-off and are distorted. traditional literature simply took need for distortionary taxation as given, argued redistribution was limited by an efficiency-equity trade-off inherent tax (Musgrave, 1959). Redistributive analysis fundamentally revisited seminal contribution (1971). By identifying asymmetric information a key constraint facing government, Mirrlees able explain taxation, rather than assuming it. His showed conclusively limits were essentially informational nature. Subsequently, (1982) problem analogous adverse selection which optimal served separate inducing them self-select level. Prior there had no formal structure or determinants schedule captured efficiency/equity rigorously.