In a bilateral trade framework, we examine the impact of tariff reduction on the optimal pollution tax and social welfare when pollution is transboundary. Strategic considerations lead countries to distort their pollution tax in the non-cooperative equilibrium. Trade liberalization changes the...

By inverting Saez (2002)'s model of optimal income taxation, we characterize the redistributive preferences of the Irish government between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite...

Optimal policy rules - including those regarding income taxation, commodity taxation, public goods, and externalities - are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and...

This paper presents a survey of the optimal commodity taxation theory and, particularly, deals with the issue of uniformity versus selectivity of commodity tax rates. A review of the main empirical models is also presented. Moreover, the study attempts to calculate the optimal commodity taxes...

A common assumption in the optimal taxation literature is that the social planner maximizes a welfarist social welfare function with weights decreasing with income. However, high transfer withdrawal rates in many countries imply very low weights for the working poor in practice. We reconcile...

Survey evidence shows that the magnitude of the tax liability plays a role in value judgements about which groups deserve tax breaks. We demonstrate that the German tax-transfer system conflicts with a welfarist inequality averse social planner. It is consistent with a planner who is averse to...

This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation—notably, raising revenue, redistributing income, and correcting externalities—and the mapping between these functions and various...

This paper is intended to offer a modest extension to the common understanding of the common agency model, originally developed in the trade literature to describe interactions between interests groups and politicians, but as applied in recent years to lobbying as it relates to tax policy. The...

By inverting Saez (2002)'s model of optimal income taxation, we characterize the redistributive preferences of the Irish government between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite...

The social cost of carbon is the central economic measure for aggregate climate change damages and functions as a metric for optimal carbon prices. Previous literature shows that inequality significantly influences the level of the social cost of carbon, but mostly neglects a major source of...