Uncertainty and Optimally Uniform Commodity Taxes
AbstractThis paper examines the implications of uncertainty for the structure of optimal commodity taxes in the presence of a linear income tax. Consumers face uncertain income and commit to consumption of some goods before the resolution of uncertainty and to others after. Preferences are separable between labor and consumption goods. We prove that optimal commodity taxes are (i) uniform within the category of noncommitted goods if their subutility is logarithmic; (ii) uniform within the two categories if both subutilities are logarithmic; and (iii) nonzero across categories, with the tax rate on precommitted goods being lower than the tax rate on noncommitted goods.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 66 (1999)
Issue (Month): 1 (July)
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- Bas Jacobs & Dirk Schindler, 2012.
"On the Desirability of Taxing Capital Income in Optimal Social Insurance,"
Working Paper Series of the Department of Economics, University of Konstanz
2012-02, Department of Economics, University of Konstanz.
- Jacobs, Bas & Schindler, Dirk, 2012. "On the desirability of taxing capital income in optimal social insurance," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 853-868.
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