Working Paper: NBER ID: w12061
Authors: Louis Kaplow
Abstract: This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation -- notably, raising revenue, redistributing income, and correcting externalities -- and the mapping between these functions and various forms of taxation. Different types of taxation as well as expenditures on transfers and public goods are each integrated into a common optimal tax framework with the income tax and commodity taxes at the core. Additional topics addressed include a range of dynamic issues, the unit of taxation, tax administration and enforcement, and tax equity.
Keywords: No keywords provided
JEL Codes: H20; H21; H23; H26; H43; H53; H71; H87; D61; D62; D63; I38; K34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher marginal tax rates on low-income individuals (H31) | Greater revenue (H27) |
| Tax structure (H20) | Social equity outcomes (D63) |
| Taxation (H20) | Revenue generation (H27) |
| Taxation (H20) | Income redistribution (H23) |
| Tax structure (H20) | Economic distortions (H31) |
| Optimal income tax design (H21) | Maximize social welfare (D69) |
| Tax policies (progressive income taxes vs commodity taxes) (H29) | Labor supply decisions (J22) |