This article incorporates tax evasion into an optimum taxation framework with individuals differing in earning abilities and initial wealth. We find that despite the possibility of its evasion a tax on initial wealth should supplement the optimal nonlinear income tax, given a positive...

This articles studies the optimal tax mix (taxes on income and commodities) under asymmetric information in a two-type model, when individuals make relative consumption comparisons. The model includes both positional and nonpositional goods, taking into account the fact that relative concerns...

This paper extends the previous literature on optimal redistributive taxation in the presence of externalities to a multi-externality 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...

Inherited wealth creates a second distinguishing characteristic of individuals, in addition to earning abilities. We incorporate this fact into a model of optimal labor income taxation, with bequests motivated by joy of giving. We find that taxes on bequests or on inheritances allow further...

The paper develops a two-sector general equilibrium search model where goods are produced exclusively in the market and services are produced both in the market and within the households. We use the model to examine how unemployment and welfare are affected by labor taxes in general and sectoral...

This paper investigates efficiency losses caused by independent tax systems and proposes ways of remedying this coordination failure Whereas the harmful effects of tariff competition have been thoroughly explored in the trade policy literature little is known about the externalities that result...

This paper uses data on Swedish local governments to test for strategic interaction in tax setting. We make no a priori assumptions regarding the underlying behaviour of individuals, but instead attempt to test for the presence and type of underlying spatial process. First, we employ the...

This paper contributes to the small empirical literature that attempts to estimate tax reaction functions of national governments competing with other national governments. After presenting a simple theoretical model, we estimate reaction functions for European countries for a pure Nash model...

The editors of the Mirrlees Review asked us to evaluate the UK VAT and the European Union VAT Directive and compare them to the New Zealand VAT model, which is called GST (Goods and Services Tax). At first sight, this brief might seem strange. After all, the VAT is a European invention that has...

Paternalism, merit goods and specific egalitarianism are concepts we sometimes meet in the literature. The thing in common is that the policy maker does not fully respect the consumer sovereignty principle and design policies according to some other criterion than individuals' preferences. Using...