This paper introduces an index of tax optimality that measures the distance of some current tax structure from the optimal tax structure in the presence of public goods. In doing so, we derive a [0, 1] number that reveals immediately how far the current tax configuration is from the optimal one and, thereby, the degree of efficiency of a tax system. We call this number the Tax Optimality Index....

Analyses of optimal government capital structure generally follow Bohn (1990) and Barro (1995) in assuming risk neutrality or an exogenous risk premium. These analyses usually conclude that the optimal government capital structure stabilizes tax rates over time and states of nature to the greatest extent possible, something known as “tax smoothing.” In this paper, we show that when an endogenou...

underground economy affects important indexes such as formal gdp, unemployment, consumption, production and etc. therefore it is necessary to identify elements and factors which affect underground economy to restrict it. surveys and studies indicate the size of iran’s underground economy is high and taxes, quantity and quality of regulations and performance of formal economy are the important f...

This paper analyzes optimal linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heterogenous individuals. A dual income tax with positive marginal tax rates on not only labor but also capital income is optimal. The key function of the tax on capital income is to reduce labor tax distortions on human capital accumu...

In this paper, a dynamic game model of duopoly firms between the traditional electric power enterprises and new energy enterprises was established for analyzing the behaviors of electric power enterprises under different government carbon taxes policies and the corresponding Nash equilibrium. This goal of the model was set to maximize the total social welfare while considering the economic, soc...

Contribution: Qualitative Policy Implications •Simple static model to capture main intuition •Efficiency case for positive subsidies on formal child care •Implementation of the optimal policy as though informal child care were observable Quantitative Exercise •Calibrate an overlapping generations model to the US economy •Optimal benefits vary with child care needs •Optimal average tax rate lowe...

In this paper, I consider a dynamic economy in which a government needs to finance a stochastic process of purchases. The agents in the economy are privately informed about their skills, which evolve stochastically over time in an arbitrary fashion. I construct an optimal tax system that is restricted to be linear in an agent’s wealth but can be arbitrarily nonlinear in his current and past lab...