Tax Policy - Principles and Lessons

Tax policies are informed by principles developed in the tax theory and policy literature. This Element surveys the policy lessons that emerge from optimal tax analysis since the 1970s. This Element begins with the evolution of tax policy principles from the comprehensive income approach to the expenditure tax approach to normative tax analysis based on social welfare maximization and recounts key results from the optimal income tax analysis inspired by Mirrlees and extended by Diamond to the extensive margin approach. This Element also emphasizes analytical techniques that yield empirically relevant concepts and show the equity-efficiency trade-off at the heart of tax policy. We also extend the analysis to recent literature incorporating involuntary unemployment, and policies like welfare and unemployment insurance.

List of contents

1. Introduction; 2. Evolving principles of tax policy extent of redistribution; 3. Policy implications from optimal tax theory; 4. Extensions to the optimal income tax approach; 5. Estimating the optimal income tax structure; 6. Different labour market environments; 7. Behavourial economics considerations; 8. Summary of policy implications; References.

Summary

This Element discusses various conceptual issues with social welfare maximization, including interdependent utilities, heterogeneous preferences, behavioural economics, social norms, and the source of the social welfare function and their implications for optimal taxation.

Product details

• Authors: Robin Boadway, Robin (Queen''s University Boadway, Katherine Cuff
• Publisher: Cambridge University Press ELT
• Languages: English
• Product format: Paperback / Softback
• Released: 31.05.2022
• EAN: 9781108949453
• ISBN: 978-1-108-94945-3
• No. of pages: 75
• Series: Elements in Public Economics
• Subjects: Social sciences, law, business > Political science > Political science and political education; POLITICAL SCIENCE / Public Policy / Economic Policy, macroeconomics, Behavioural economics, Labour Economics, Taxation, Family and health