We develop a unifying framework for optimal income taxation in multi-sector economies with general patterns of externalities. Agents in this model are characterized by an N-dimensional skill vector corresponding to intrinsic abilities in N potentially externality-causing activities. The private...

This paper considers optimal linear tax structures that are differentiated according to group membership. Groups can be heterogeneous with respect to both preferences and abilities. Contrary to most arguments in favour of tax privileges for certain groups, e.g. gender-based taxation, it is shown...