abilities and initial wealth. We find that despite the possibility of its evasion a tax on initial wealth should supplement the … optimal nonlinear income tax, given a positive correlation between initial wealth and earning abilities. Further, even if … income and initial wealth are taxed optimally, it is still desirable to levy a tax on commodities, though it can be evaded as …

Conventional one-period utility functions in economics assume that initial wealth only enters preferences through the … authors show how making parameters depend on initial wealth extends the class of functions which give two- fund separation and … implausible risk characteristics. The authors characterise a new class of utility functions whose parameters depend upon initial …