I would like to thank Julian Alworth and Luca Micheletto for helpful comments and suggestions. Financial support by the Italian Ministry for University and Research is gratefully acknowledged. Any opinion expressed in the papers included into the Quaderni del Dipartimento di Scienze Economiche e Matematico-Statistiche are those of the authors. Citation and use of these papers should consider their provisional character. Abstract This paper investigates whether the pursuit of redistributional

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... ectives may provide a rationale for source-and origin-based taxation in small open economies. The analysis is developed in a simple two-class economy where consumers are classified according to the type of labour they supply. Source-based taxes on capital income and commodity origin-based taxes result in a differential burden on the two types of labour. When labour income is taxed with a linear schedule, the government can exploit the differential incidence of source-and origin-based taxes to improve income allocation. By contrast, if a non-linear tax is levied on labour income, sourceand origin-based taxes cannot directly improve income distribution as the two types of labour have different marginal tax rates. However, they can improve social welfare by relaxing the self-selection constraints that bind the nonlinear tax. JEL classification: H21, H22, H73, D33.