Tax Policy with Uncertain Future Costs: Some Simple Models
AbstractThis paper considers the extent to which the standard argument, that the disproportionate excess burden of taxation suggests the use of tax-smoothing in the face of future cost increases, is modified by uncertainty regarding the future. The role of uncertainty and risk aversion are examined using several highly simplified models involving a possible future contingency requiring an increase in tax-financed expenditure.
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Bibliographic InfoPaper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 13/07.
Date of creation: Apr 2013
Date of revision:
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Tax Smoothing; Uncertainty; Risk Aversion; Excess Burden;
Other versions of this item:
- Ball, Christopher & Creedy, John, 2013. "Tax Policy with Uncertain Future Costs: Some Simple Models," Working Paper Series 2839, Victoria University of Wellington, Chair in Public Finance.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D90 - Microeconomics - - Intertemporal Choice - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-PBE-2013-04-27 (Public Economics)
- NEP-PUB-2013-04-27 (Public Finance)
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