From Optimal Tax Theory to Applied Tax Policy

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 ...

Optimal Tax Theory: A Synthesis

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 Evasion, Taxation Inspection and Net Tax Revenue: from an Optimal Tax Administration Perspective

Tax evasion has always been an important topic to tax theory researchers and the department of government. However, existing research results are confined to the unilateral action of taxpayers, neglect the interaction between the tax declaration and taxation inspection. This paper, from an optimal tax administration perspective, builds a general equilibrium model, in which, taxation inspection ...