Examining A Lump Sum Tax and Optimal Tax Theory

Optimal Tax Theory: A Synthesis

From Optimal Tax Theory to Applied Tax Policy

This paper aims to provide a perspective on the ideal tax system using insights from optimaltax theory supplemented with empirical evidence. These insights are applied to actual policy questions regarding the progressiveness of the labor income tax, in-work tax credits, the design of the capital income tax, the taxation of housing and pensions, the role of indirect taxes, optimal environmental ...

Basic Welfare Economics and Optimal Tax Theory

There are two criteria by which economists measure the outcomes of tax policy: 1. E¢ ciency, which is traditionally the purview of economics, and does not involve ethical and normative judgments. E¢ ciency considers only how resources are allocated 2. Equity, which considers the distribution of resources. We will need to refer to social norms and value judgments to get conclusions based on this...

Tax evasion and the optimal inflation tax

We developed a simple monetary model to study the effects of tax evasion on the optimal inflation tax. The model is constructed so that inflation might be an indirect way of taxing the underground sector of the economy. We show that while there are theoretical reasons for positive optimal inflation rates, the effects are quantitatively small, even in countries with large underground sectors. We...

Tax Compliance and Advance Tax Payments: A Prospect Theory Analysis

753 National Tax Journal Vol. LII, No. 4 Abstract While obligatory advance tax payments do not interfere with the taxpayer’s evasion decision under expected utility theory, they do affect the decision to evade under prospect theory. The present paper applies prospect theory to a simple model of tax evasion, exploring the role that advance tax payments may play in enforcing tax laws. The paper d...