Measuring Tax Efficiency: A Tax Optimality Index
AbstractThis paper introduces an index of tax optimality that measures the distance of some current tax structure from the optimal tax structure in the presence of public goods. In doing so, we derive a [0,1] number that reveals immediately how far the current tax configuration is from the optimal one and, thereby, the degree of efficiency of a tax system. We call this number the Tax Optimality Index. We show how the basic method can be altered in order to derive a revenue equivalent uniform tax, which measures the size of the public sector. A numerical example is used to illustrate the method developed.
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 Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 04-08.
Length: 26 pages
Date of creation: Jun 2004
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
tax optimality index; excess burden; distance function;
Other versions of this item:
- Pascalis Raimondos-Møller & Alan D. Woodland, 2004. "Measuring Tax Efficiency: A Tax Optimality Index," CESifo Working Paper Series 1236, CESifo Group Munich.
- Raimondos-Møller, Pascalis & Woodland, Alan D, 2004. "Measuring Tax Efficiency: A Tax Optimality Index," CEPR Discussion Papers 4566, C.E.P.R. Discussion Papers.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-11 (All new papers)
- NEP-PBE-2004-07-11 (Public Economics)
- NEP-PUB-2004-07-26 (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.:
- Diewert, W. E., 1985. "A dynamic approach to the measurement of waste in an open economy," Journal of International Economics, Elsevier, vol. 19(3-4), pages 213-240, November.
- Anderson, James E & Neary, J Peter, 1992.
"A New Approach to Evaluating Trade Policy,"
CEPR Discussion Papers
683, C.E.P.R. Discussion Papers.
- Anderson, J.E., 1998.
"The Mercantilist Index of Trade Policy,"
98/13, College Dublin, Department of Political Economy-.
- J Anderson & J.P. Neary, 1998. "The Mercantilist Index of Trade Policy," CEP Discussion Papers dp0413, Centre for Economic Performance, LSE.
- James E. Anderson & J. Peter Neary, 1998. "The Mercantilist Index of Trade Policy," Working Papers 199813, School Of Economics, University College Dublin.
- James E. Anderson & J. Peter Neary, 1998. "The Mercantilist Index of Trade Policy," Boston College Working Papers in Economics 416, Boston College Department of Economics.
- James E. Anderson & J. Peter Neary, 1999. "The Mercantilist Index of Trade Policy," NBER Working Papers 6870, National Bureau of Economic Research, Inc.
- Anderson, James E & Neary, J Peter, 1998. "The Mercantilist Index of Trade Policy," CEPR Discussion Papers 2044, C.E.P.R. Discussion Papers.
- J. Peter Neary, 1996.
"Rationalising the Penn World Table - True Multilateral Indices for International Comparisons of real Income,"
199622, School Of Economics, University College Dublin.
- J. Peter Neary, 2004. "Rationalizing the Penn World Table: True Multilateral Indices for International Comparisons of Real Income," American Economic Review, American Economic Association, vol. 94(5), pages 1411-1428, December.
- Diamond, P. A. & McFadden, D. L., 1974. "Some uses of the expenditure function in public finance," Journal of Public Economics, Elsevier, vol. 3(1), pages 3-21, February.
- Alan J. Auerbach, 1986.
"The Theory of Excess Burden and Optimal Taxation,"
NBER Working Papers
1025, National Bureau of Economic Research, Inc.
- J. Christophe Bureau & Nancy H. Chau & Rolf F”re & Shawna Grosskopf, 2003. "Economic Performance, Trade Restrictiveness, and Efficiency," Review of Development Economics, Wiley Blackwell, vol. 7(4), pages 527-542, November.
- Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017, November.
- Nancy H. Chau & Rolf F”re & Shawna Grosskopf, 2003. "Trade restrictiveness and efficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1079-1095, 08.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Fischer).
If references are entirely missing, you can add them using this form.