The signaling effect of tax policy

The paper focuses on the signaling value of a tax when agents are less informed on the effect of their consumption than the policy-maker. When he chooses the tax, the policy-maker optimizes both the incentive effect and the effect on beliefs. We show that optimal taxes under symmetric information are not implementable under asymmetric information. The tax distortion required for credibility depends on the marginal cost of public funds and brings to undertaxation.

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Year of publication:	2004
Authors:	Barigozzi, Francesca ; Villeneuve, Bertrand
Publisher:	Bologna : Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
Subject:	Steuerpolitik \| Signalling \| Optimale Besteuerung \| Wohlfahrtsanalyse \| Theorie

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Series:	Quaderni - Working Paper DSE ; 500
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.6092/unibo/amsacta/4794 [DOI] 39256887X [GVK] hdl:10419/159341 [Handle] RePEc:bol:bodewp:500 [RePEc]
Source:	EconStor

Persistent link: https://www.econbiz.de/10011651394