Optimal Tax Framework Research Articles

Environmental taxation in an optimal tax framework with multiattribute analysis

Environmental taxation in an optimal tax framework with multiattribute analysis

Brennan and Buchanan's Leviathan models

This article develops Brennan and Buchanan's Leviathan models in a general equilibrium optimal tax framework. A subset of the population called rulers choose the supply of public goods and set tax rates on all goods within the tax base. The tax base is restricted by the subjects in a constitution. The choice of public goods, tax rates and tax base depend critically on the number of rulers and whether rulers reside domestically or abroad and are taxed or untaxed. Usually subjects prefer domestic to foreign rulers, taxed to untaxed rulers and more rulers to less rulers.

Least‐Cost Subsidization Alternatives: Comment

Comments on an article about the application of optimal tax framework to derive least-cost subsidization conditions in farms. Arguments concerning government expenditures; Criticisms on the study's conclusions; Formula used for computing the cost of the input subsidy scheme.

Least‐Cost Subsidization Alternatives

AbstractThis paper considers least‐cost subsidy alternatives for agriculture in an optimal tax framework. The goal of farm policy is presumed to be the economic survival of a particular class of farmers. Least‐cost formulas for linear subsidies are derived. It is shown that output subsidization alone will generally not be least cost.

On the Welfare Cost of Permanent Inflation

MOST WORK ON INFLATION AND WELFARE RELIES ON SOME variant of the optimal tax framework. By the straightforward application of the static optimal tax literature, Helpman and Sadka (1979) attempt to present sufficient conditions under which the optimal rate of inflation is positive in a second-best world, though they do not discuss the level of optimal inflation. As stressed by Siegel (1978), in the static problem there is an infinite set of tax rates that minimize welfare costs, and hence a value of optimal inflation cannot be determined. All we can say is that Friedman's optimum quantity of money rule is generally not optimal in a second-best world. In an intertemporal framework, however, an optimal inflation rate can be determined. Summers (1981) presents an explicit expression for the optimal rate of inflation under ad hoc formulations of savings behavior. In general the optimal rate of inflation will be determined implicitly by a combination of references and technology. The difficulty in saying anything explicit about the optimal rate of inflation is now generally recognized. An alternative approach is to explore the welfare cost of inflation more systematically. If the welfare cost of inflationary finance is relatively small compared with other distortionary taxes, the optimal rate of inflation may well be high. The welfare effects are examined by starting with the expenditure function and comparing the