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Revisiting the Classical View of Benefit-Based Taxation

Weinzierl, Matthew - 2014

's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory. If … may offer a useful approach to a positive optimal tax theory …

Persistent link: https://www.econbiz.de/10013040529

On the Undesirability of Commodity Taxation Even When Income Taxation is Not Optimal

Kaplow, Louis - 2021

An important result due to Atkinson and Stiglitz (1976) is that differential commodity taxation is not optimal in the presence of an optimal nonlinear income tax (given weak separability of utility between labor and all consumption goods). This article demonstrates that their conclusion holds...

Persistent link: https://www.econbiz.de/10013224218

Optimal Tax Theory : Econometric Evidence and Tax Policy

Boskin, Michael J. - 2021

The purpose of this paper is to provide a progress report on the issue of the implications of optimal tax theory and … major results of optimal tax theory. Section 3 reports the results of some recent econometric studies of saving and labor … supply. Finally, Section 4 outlines the implications of the combined theory and econometric evidence for tax policy …

Persistent link: https://www.econbiz.de/10013225427

A Theory of Income Taxation Under Multidimensional Skill Heterogeneity

Rothschild, Casey G. - 2014

We develop a unifying framework for optimal income taxation in multi-sector economies with general patterns of externalities. Agents in this model are characterized by an N-dimensional skill vector corresponding to intrinsic abilities in N potentially externality-causing activities. The private...

Persistent link: https://www.econbiz.de/10013060680

Ricardian Consumers with Keynesian Propensities

Barsky, Robert B.; Mankiw, Nicholas Gregory; Zeldes, … - 2021

In this paper, we examine Ricardian equivalence of debt and tax finance in a world in which taxes are not lump-sum but are levied on risky labor income. First, we show that the marginal propensity to consume out of a tax cut, coupled with a future income tax increase, is positive under...

Persistent link: https://www.econbiz.de/10013230621

Do Taxpayers Bunch at Kink Points?

Saez, Emmanuel - 2021

This paper investigates whether taxpayers bunch at the kink points of the US income tax schedule (i.e. where marginal rates jump) using tax returns data. Clear evidence of bunching is found only at the first kink point (where marginal rates jump from 0 to 15%). Evidence for other kink points is...

Persistent link: https://www.econbiz.de/10013215697

Human Capital and the Income Tax

Kaplow, Louis - 2011

This article examines how to treat human capital -- perhaps the vast majority of the capital stock -- under an ideal, Haig-Simons income tax. Innate ability, investments in human capital, and uncertainty in future earnings are considered. It is demonstrated that conventional income tax treatment...

Persistent link: https://www.econbiz.de/10013127764

Variable Earnings and Nonlinear Taxation

Rothschild, Michael; Moffitt, Robert A. - 2021

We explore the interaction between two facts. The first is that income is variable; the second is that the tax and transfer system transforms before tax income into after tax income in highly non-linear ways. The effect is to penalize (and reward) income variability in a manner which is both...

Persistent link: https://www.econbiz.de/10013213460

Tax Avoidance and the Deadweight Loss of the Income Tax

Feldstein, Martin S. - 2022

The traditional method of analyzing the distorting effects of the income tax greatly underestimates its total deadweight loss as well as the incremental deadweight loss of an increase in income tax rates. Deadweight losses are substantially greater than these conventional estimates because the...

Persistent link: https://www.econbiz.de/10013323469

Understanding Different Approaches to Benefit-Based Taxation

Scherf, Robert; Weinzierl, Matthew - 2022

The normative principle of benefit-based taxation has exerted substantial influence on many areas of public finance, but it has been largely set aside in the modern theoretical approach to optimal income taxation, where welfarist objectives dominate. A prerequisite for that gap to close is the...

Persistent link: https://www.econbiz.de/10013323985