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Questions tagged [optimal-taxation]

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Why tax investment?

I assume that investing is more useful than consuming for society as a whole, at least in the long run. But then why isn't the government taxing consumption more and investment less? This would create ...
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Does GST/VAT taxation reduce offshore corporate tax avoidance?

So large tech companies are known for having some side 'off shore' company in a 0% tax country (like, but not exclusively, The Bahamas), which charges royalties at approximately the same amount, as ...
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Optimal Top Marginal Tax Rates

Some of you might know of US politician Alexandria Ocasio-Cortez, a member of the Democratic Party as well as the Democratic Socialists of America. In a recent interview she had on 60 Minutes, she ...
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A utility function that gives a regressive tax rate [closed]

I see some discussion that the reasoning for the construction of a tax rate function is the utility function. Whould $u=\ln\ln w$ function where $u$ is the utility and $w$ the wealth give a regressive ...
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Would taxing money owned (as a share of purchasing power) be a better form of taxation?

Consider a nation whose money is entirely digital (like Bitcoin), but centralized (unlike Bitcoin). Furthermore, the total money supply is fixed, i.e. money cannot be created nor destroyed. To be ...
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Why do higher real interest rates increase land value?

I'm using this equation to calculate market value of land based on the levied land value tax: y = market land value x = land value tax r = real interest rate a = real time-independent land value i = ...
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Why can't the Land-Value Tax (in some cases) be passed on to tenants?

According to https://en.wikipedia.org/wiki/Land_value_tax: Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, That doesn't make any sense. If ...
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Aggregating in a Continuum

I am working with the following Economic model of labour and consumption decisions: I have a population whose mass is normalized to one of consumers. They derive utility from consumption $c$,...
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What at all justifies income taxes (as opposed to sales taxes only)?

For those who do not know, in America, the higher your income, the higher the percent of it is spent on taxes. This means that, whatever tax money is used for, those who are more hardworking (or, at ...
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Should housing be considered a form of capital for the purpose of capital gains taxation?

Economists across the political spectrum almost unanimously oppose the home mortgage interest tax deduction. While I'm sure there are a few whom I've missed, I could only find a single professional ...
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If US capital income taxation were eliminated, which ordinary income tax brackets would be equally progressive?

This question only considers federal taxes in the United States. Also, by "capital income" I am including dividends, interest, capital gains, corporate incomes and estates. The Chamley-Judd result ...
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Private and Social Optimum with externality in this example

Firstly, I wanted to know if we may be consider as an externality, a situation such that a customer A bought a bike to a seller B, not properly checked - and which may provoke some accidents. ...
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Paternalistic Government policies

A consumer with income $m$ has preferences $U(x , y) = x^a y^{1-a} $ where a is between 0 and 1. A paternalistic Government wants to regulate the choices of the consumer to maximize it's own welfare ...
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The effect of structural unemployment on revenue from value added tax

Bill Gates and European countries have shown favor for consumption/VAT taxes. The arguments given by proponents are often something along the lines that "we know how to tax certain items more than ...
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Is corporate tax an argument in equal income tax (from labour and capital) debate and does the return on capital depend on rate of the corporate tax?

In our country we have 25% personal income tax on labour, 15% corporate tax on corporations and 10% personal income tax on income from capital (e.g. dividends). Pundits in our country are saying that ...
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The United States' position on the Laffer Curve

According to a 2012 IGM panel (cf. reference below), most experts believe that a federal income tax cut would lead to a higher GDP in five years, ceteris paribus. Is this effect purely Keynesian, and ...
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What would be the economic impact of the “fair tax” plan?

So I read about an interesting proposal about completely replacing income tax with a heavy national sales tax of about 30% (23% inclusive to compare to income tax). I was thinking about what the ...
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Why are there estate taxes after the owner passes away?

Isn't it unfair for estates to be taxed after death? The person who bequeathed the estate probably purchased it with after tax money, so wouldn't it then be taxed twice? What is the purpose of the tax ...
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Difference-in-Difference on State Sales Tax Rates

In an attempt to evaluate a potential U.S. National Sales tax rate, it was suggested on this forum before that I consider a difference-in-difference on state sales tax rates before and after they ...
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Derivation on p.99 of Salanie, The Economics of Taxation (2nd edition)

Starting on p. 98 of Salanie's "The Economic of Taxation" (2nd edition), it explains To probe it more rigorously, let us define the utility of taxpayer $w$ when he claims to have productivity $w'$: ...
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Equality, Taxes & Business Growth

First, I'm not an economist - just a regular Joe interested in a small part of the subject. Second, I apologize if this is a better question for the 'politics' stack exchange, but I figured I might ...
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Optimal taxation and substitute commodities

Reading Ramsey's paper: a contribution to the theory of taxation. It says that when we are dealing with rival goods we look if the tax that is going to be applied leave unchanged the proportions in ...
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Simple Sketch of Mirrlees 1971

Mirrlees' 1971 paper (An Exploration in the Theory of Optimum Income Taxation) on optimal taxation can sometimes be hard to follow. Does anybody know of (or could even provide here) a simple sketch of ...