Recent years has seen an explosion of financial innovation aimed at exploiting inconsistencies in the income tax. In its most extreme form, parties engage in tax arbitrage, the practice of buying and selling the same cash flows to generate an after-tax profit. The primary tool for many of these...

This article reviews recent advances in the study of dynamic taxation, considering three main approaches: the dynamic Mirrlees, the parametric Ramsey, and the sufficient statistics approaches. In the first approach, agents’ heterogeneous abilities to earn income are private information and...

This paper provides an overview and assessment of alternative methods of taxing capital income. We begin by considering why, and to what extent, capital income should be taxed. Having established a reasonably robust case for such taxation, we then review the difficulties of taxing capital income...

We compare unit and ad valorem commodity tax regimes under the "Leviathan hypothesis" that the government seeks to maximize tax revenue. We show that the ad valorem tax regime welfare-dominates the unit tax regime if and only if the economy exhibits "ad valorem under-shifting" in response to a...

In economic analyses of the effects of tax policies, one commonly encounters discussions of the equivalence of apparently different policies, where equivalence is defined as the policies having the same impact on fundamental economic outcomes. These related tax policies may differ in many...

An important proposition in the theory of efficient taxation is that, if capital income is taxed, all types of capital income should be taxed at the same rate. This conclusion has motivated extensive empirical analysis of the tax rates on different types of capital income. It has also been the...