Within the confines of linear tax and complete market, we show that the efficiency force for a negative capital tax may not be strong enough to reverse the politico-economic force for a positive redistributive taxation under temptation and self-control preferences.

This paper opens a new perspective from which one can explain the presence of government intervention in education even in the absence of human capital externality. It argues that consumption externalities can provide rationale for government intervention in education. Within the context of...