Working Paper: NBER ID: w1025
Authors: Alan J. Auerbach
Abstract: The purpose of this paper is to present the chronological development ofthe concept of excess burden and the related study of optimal tax theory. A main objective of this exercise is to uncover the interrelationships among various apparently distinct results, so as to bring out the basic structure of the entire problem.The paper includes a discussion of various measures of excess burden,focusing on issues of approximation, informational requirements, aggregation over individuals, and the effects of technology. Included in the presentation of optimal tax theory is a section on tax reform, as well as an application of the theory to the case where uncertainty is present.
Keywords: Optimal Taxation; Excess Burden; Public Finance
JEL Codes: H21; H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increasing tax rates (H29) | Reduction in consumer surplus (D11) |
| Higher taxes (H29) | Greater excess burden (H22) |
| Tax imposed on goods with elastic demand (H31) | Greater excess burden (H22) |
| Introduction of multiple taxes (H29) | Non-linear increases in excess burden (H22) |