The literature on externalities and optimal redistributive taxation in the presence of asymmetric information has so far been confined to the case where externalities are of the "atmospheric" type. One of the main results from this literature has been that the so called additivity property...

This paper models a two-period overlapping-generations economy with money populated with individuals of different skills. They face a nonlinear income tax schedule and can engage in tax evasion. Money serves two purposes: the traditional one, modeled through a money-in-the-utility-function; it...