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The Atkinson–Stiglitz theorem is a theorem of public economics. It implies that no indirect taxes need to be employed where the utility function is separable between labor and all commodities. Non-linear income taxation can be used by the government and was in a seminal article by Joseph Stiglitz and Anthony Atkinson in 1976. The Atkinson–Stiglitz theorem is an important theoretical result in public economics, spawning a broad literature that delimited the conditions under which the theorem holds. For example, Emmanuel Saez, a French-American professor and economist demonstrated that the Atkinson–Stiglitz theorem does not hold if households have heterogeneous preferences rather than homogeneous ones.
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