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...

The value of stock-based compensation is typically taxed as ordinary income to the employee at vesting, but subsequent gains on the stock are capital gains. I examine whether it is ever optimal for an employee to accelerate the payment of ordinary income tax in order for subsequent gains to be taxed at the lower capital gains rate. The employee may accomplish this, for example, by exercising a ...

in this article, optimal vat rates have been calculated for the three different levels of consumption tax revenue needed by the government. using the data of 10 income groups of the iranian rural and urban households in the period(1378-1386) and applying panel data approach, the almost ideal demand system(aids) were estimated to derive the price and income elasticities. then, the optimal vat ra...

This paper examines optimal cooperative and non-cooperative environmental taxes for the case in which a polluting input is used to produce an internationally-traded finished product. The model allows for terms-of-trade effects under oligopoly and employs a general specification of the environmental damage function that encompasses special cases of local, global, and transboundary externalities....

This paper introduces a model of optimal health insurance. This model provides theoretical guidance of the relationship between household preferences, cost-sharing, and premiums. I apply this model to understand how the income tax subsidy distorts optimal cost-sharing in health insurance. Typically, insurance protects individuals from financial risk. Health insurance plans, however, are frequen...

Miller (1977) emphasized that optimal corporate financial policy depends on the tax rates facing the firm as well as the tax treatment accorded bondand stock-holders. In equilibrium, firms will issue claims that are held by the full spectrum of investors, from tax-exempt institutional investors to heavily taxed individuals. However, dealers are tax neutral institutions that can buy corporate se...

We examine the welfare consequence of emissions tax with and without a Border Tax Adjustment for an imperfectly competitive industry, where intraindustry trade arises between countries. BTA allows a government to impose a pollution-content tari¤ on imports and refund an emission tax for export sales. We analyze the structure of an optimal emission tax with BTA when a government chooses its emis...

We consider the impact of taxes on the quantity and quality produced of goods, such as wine, for which market value accrues with age. Any pair of taxes that includes a volumetric sales tax and any one of three other types of tax – an ad valorem sales tax, an ad valorem storage tax, or a volumetric storage tax – spans the quality/revenue space and can support an optimal tax system. Provided soci...

Bovenberg and de Mooij (1994) showed that, in the presence of preexisting distorting taxes, the optimal pollution tax typically lies below social marginal damages. The authors view this result as a refutation of the so-called "double dividend hypothesis," which suggests that a tax on pollution can both improve the environment and reduce distortions in the tax system. Their paper spawned a large...

Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical cross-section and panel evidence supports this theoretical result. JEL: E31, E52, H21, O17