This paper deals with optimal income and commodity taxation in an economy, where alcohol is an externality-generating consumption good. In our model, alcohol can be bought domestically, imported, or produced illegally. Border trade alone implies an incentive to set the domestic alcohol tax below...

This paper extends the previous literature on optimal redistributive taxation in the presence of externalities to a multiexternality setting. While taxes on income and on 'clean' commodities are still unaffected by the externalities, which confirms previous results, I find that the existence of...

This paper deals with public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. The results show that imperfect...

We extend the classical tax-competition framework of Zodrow and Mieszkowski (1986) by modeling involuntary unemployment and by allowing for labor taxation as a second source of public funds. Even though the framework of the Zodrow-Mieszkowski model is extended into two dimensions, we are able to...

We analyze the welfare consequences of tax coordination agreements that cover taxes on mobile capital and on immobile labor. In doing so, we take into account two important institutional details. First, we incorporate decentralized wage bargaining, giving rise to involuntary unemployment....

We investigate how continental European unemployment can be reduced without reducing unemployment benefits and without reducing the net income of low-wage earners. Lower unemployment replacement rates reduce unemployment, the net wage, and unemployment benefits. A lower tax on labor increases...

The literature suggests that the concern for economic efficiency calls for individual-based taxation of married couples with a higher rate on the primary earner. This paper reconsiders the choice of tax unit in the Becker model of household production. In the absence of restrictions on the use...

In a two-period world with endogenous savings and two assets, the optimal tax structure and optimal diversification of aggregate (capital) risk between private and public consumption are analyzed. We show that there is no trade-off between efficiency in intertemporal consumption and allocation...

Are there still opportunities for welfare-improving reforms in unfunded pension systems? To answer this question, we analyze the intertemporal structure of implicit taxes in pay-as-you-go pension schemes. We demonstrate that these tax rates are declining over the life cycle. This timing is...

We evaluate the welfare impact of changing the VAT on food in a context in which households can produce home meals for own consumption that compete with meals served in restaurants. Home production of meals requires the combination of food and time inputs. The fiscal treatment in home production...