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 of 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 independent 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-299.
Length: 13 pages
Date of creation: Jun 2004
Date of revision:
Optimal Commodity Taxation; Ramsey Rule;
Other versions of this item:
- Stefan Homburg, 2006. "A New Approach to Optimal Commodity Taxation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, TÃ¼bingen, Mohr Siebeck, TÃ¼bingen, vol. 62(3), pages 323-338, September.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-06-13 (Accounting & Auditing)
- NEP-ALL-2004-06-13 (All new papers)
- NEP-PBE-2004-06-13 (Public Economics)
- NEP-PUB-2004-06-22 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stern, Nicholas, 1986. "A Note on Commodity Taxation: The Choice of Variable and the Slutsky, Hessian and Antonelli Matrices (SHAM)," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(2), pages 293-99, April.
- Michael Smart, 2002. "Reforming the Directâ€“Indirect Tax Mix," International Tax and Public Finance, Springer, Springer, vol. 9(2), pages 143-155, March.
- Auerbach, Alan J. & Hines, James Jr., 2002.
"Taxation and economic efficiency,"
Handbook of Public Economics, Elsevier,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421
- Atkinson, A. B. & Stiglitz, J. E., 1972. "The structure of indirect taxation and economic efficiency," Journal of Public Economics, Elsevier, vol. 1(1), pages 97-119, April.
- Mirrlees, J. A., 1976.
"Optimal tax theory : A synthesis,"
Journal of Public Economics,
Elsevier, vol. 6(4), pages 327-358, November.
- Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
- Sandmo, Agnar, 1987. "A Reinterpretation of Elasticity Formulae in Optimum Tax Theory," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 54(213), pages 89-96, February.
- David Coady & Jean DrÃ¨ze, 2002. "Commodity Taxation and Social Welfare: The Generalized Ramsey Rule," International Tax and Public Finance, Springer, Springer, vol. 9(3), pages 295-316, May.
- Deaton, Angus, 1979. "The Distance Function in Consumer Behaviour with Applications to Index Numbers and Optimal Taxation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(3), pages 391-405, July.
- Yoshitomo Ogawa, 2007. "The optimal commodity tax structure in a four-good model," International Tax and Public Finance, Springer, Springer, vol. 14(6), pages 657-671, December.
- Ulrich van Suntum, . "Income Taxes, Death Taxes, and Optimal Consumption-Leisure-Savings-Choice," Working Papers, Institute of Spatial and Housing Economics, Munster Universitary 200124, Institute of Spatial and Housing Economics, Munster Universitary.
- Homburg, Stefan, 2010. "Allgemeine Steuerlehre," EconStor Books, ZBW - German National Library of Economics, number 92547, October.
- van Suntum, Ulrich, 2008. "Income taxes, death taxes, and optimal consumption-leisure-savings-choice," CAWM Discussion Papers 4, Center of Applied Economic Research Münster (CAWM), University of Münster.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Heidrich, Christian).
If references are entirely missing, you can add them using this form.