A New Approach to Optimal Commodity Taxation
AbstractThis paper makes a fresh attempt at characterizing optimal commodity taxes. Under the usual assumptions, an extremely simple expression for second-best commodity taxes is derived, showing tax rates as functions of observable variables only, rather than as functions of unobservable variables such as compensated cross-elasticities. The main formula is independent of special preferences and of the number of commodities. It has a simple economic meaning and could be particularly useful for empirical research. Examples and remarks on the normalization problem are provided.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 62 (2006)
Issue (Month): 3 (September)
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Other versions of this item:
- Stefan Homburg, 2004. "A New Approach to Optimal Commodity Taxation," CESifo Working Paper Series 1231, CESifo Group Munich.
- Homburg, Stefan, 2004. "A New Approach to Optimal Commodity Taxation," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃ¤t der Leibniz UniversitÃ¤t Hannover dp-299, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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