Optimal Redistributive Taxation
Matti Tuomala
Abstract
The book explains in depth the Mirrlees model itself and presents various extensions of it. The first set of extensions considers changing the preferences for consumption and work: behavioural–economic modifications (such as positional externalities, prospect theory, paternalism, myopic behaviour and habit formation) but also heterogeneous work preferences (besides differences in earnings ability). The second set of modifications concerns the objective of the government. The book explains the differences in optimal redistributive tax systems when governments—instead of maximizing social welfa ... More
The book explains in depth the Mirrlees model itself and presents various extensions of it. The first set of extensions considers changing the preferences for consumption and work: behavioural–economic modifications (such as positional externalities, prospect theory, paternalism, myopic behaviour and habit formation) but also heterogeneous work preferences (besides differences in earnings ability). The second set of modifications concerns the objective of the government. The book explains the differences in optimal redistributive tax systems when governments—instead of maximizing social welfare—minimize poverty or maximize social welfare based on rank order or charitable conservatism social welfare functions. The third set of extensions considers extending the Mirrlees income tax framework to allow for differential commodity taxes, capital income taxation, public goods provision, public provision of private goods, and taxation commodities that generate externalities. The fourth set of extensions considers incorporating a number of important real-world extensions such as tagging of tax schedules to certain groups of taxpayers. In all extensions, the book illustrates the main mechanisms using advanced numerical simulations.
Keywords:
optimal taxation,
redistribution,
inequality,
public provision,
incentives,
equity
Bibliographic Information
| Print publication date: 2016 |
Print ISBN-13: 9780198753414 |
| Published to Oxford Scholarship Online: March 2016 |
DOI:10.1093/acprof:oso/9780198753414.001.0001 |
