貧困層 變化에 따른 最適所得稅와 最適移轉支出

The criterion of 'no-envy' has been widely used and rightfully accused of misconception because it does not consider the envy externality. Another problem with orthodox economics is that income distribution theory does not adequately explain the results of income inequality. Since its introduction of Foley, Goldman and Sussankarn (1983) showed that the Foley's criterion is ill-conceived, meaningless and invalid because it fails to model the externality implied by envy. In this paper, the interdependent utility functions were introduced as a solution to explanation of social problems. It is assumed that two groups of people, the Rich and the Poor exhibit the same behavior, which a market failure occurs in favor of the Rich. Conflict will, however, occur when the limits of the benevolence are reached. The most common compromises by the government are direct income tax and lump-sum transfers. The sets of parameters for the optimal tax rates and transfer were obtained using the Cobb-Douglas utility function. Analysis of the relationship between the population size of the Poor and optimal tax rates indicates that the optimal tax rate increases regressively as the population size of the Poor increases to a certain level and progressively above the level. The transfer, however, also increases to a certain level and decreases because of two phenomena: the increase in the optimal tax rate and the decrease in the population size of the Rich.