On the Assumptions of the Optimal Taxation Problem: Is Distortionary Taxation a Burden or a Blessing?
AbstractI consider a reasonable deviation from the standard assumptions in the optimal taxation literature on public consumption and show that the results on the optimal taxes are substantially altered. In particular, `distortionary' taxes may be optimal after all. This reveals that, in contrast to the common practice, the analysis of optimal taxation cannot be done independently of the analysis of the optimal public provision of goods and services.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 926.
Date of creation: 2009
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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- Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
- Robert E. Lucas Jr. & Nancy L. Stokey, 1982.
"Optimal Fiscal and Monetary Policy in an Economy Without Capital,"
532, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Lucas, Robert Jr. & Stokey, Nancy L., 1983. "Optimal fiscal and monetary policy in an economy without capital," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 55-93.
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