Optimal Taxation of Consumption and Income

Optimal taxation and tax system design both involve important tradeoffs with respect to efficiency fairness, researchers in the fields of public finance applied economics have analyzed these issues for many years. In this study, while focus is primarily on optimal consumption income taxes, we first explain concepts excessive burden as they relate topic. Then, examine structure an system. Lastly, address emphasizing theoretical discussions their impact economy. The aim study reveal how taxes are related, through a literature review, whether studies influenced policies. This review reveals that theory (i) flat rate income, (ii) zero marginal rates high (iii) shifting indirect been reflected reforms. However, find does not mean every country applies or should apply same way; be considered according specific socio-economic structures developed developing countries, way reflects each society. While from past present must take place within framework optimality will continue into future developments technology. addition, factors such country’s level economic development, international competition, capital flows, environmental keep issue politically alive.