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Yet Another Reason to Tax Goods

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  • Carlos E. da Costa

    (Fundacao Getulio Vargas)

Abstract

Golosov et al. (2003) have extended Atkinson and Stiglitz's uniform tax prescription to a dynamic Mirrlees' (1971) economy under the assumption that the government fully controls the agent's savings. When savings are not controlled by the government we show that the result is no longer valid: separability is not sufficient to guarantee that uniform taxes are optimal. If, beyond being separable, preferences over consumption bundles are quasi-homothetic, constrained efficiency of uniform taxes is restored. We also show that optimal taxes on the returns of capital are, in general, different from zero. (Copyright: Elsevier)

Suggested Citation

  • Carlos E. da Costa, 2009. "Yet Another Reason to Tax Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 363-376, April.
    • Handle: RePEc:red:issued:07-134
    DOI: 10.1016/j.red.2008.08.002
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    References listed on IDEAS

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    Cited by:

    1. Stefanie Stantcheva, 2020. "Dynamic Taxation," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 801-831, August.
    2. Mikhail Golosov & Aleh Tsyvinski, 2007. "Optimal Taxation with Endogenous Insurance Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 487-534.
    3. da Costa, Carlos E. & Maestri, Lucas J., 2007. "The risk properties of human capital and the design of government policies," European Economic Review, Elsevier, vol. 51(3), pages 695-713, April.
    4. Carvajal, Andrés & Thereze, João, 2023. "Insurance contracts and financial markets," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 8-19.

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    More about this item

    Keywords

    Supplementary commodity taxation; New dynamic public finance; Hidden savings;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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