scholarly journals Making Bequests Without Spoiling Children: Bequests as an Implicit Optimal Tax Structure and the Possibility That Altruistic Bequests are not Equaliz

10.3386/w2735 ◽  
1988 ◽  
Author(s):  
Laurence Kotlikoff ◽  
Assaf Razin
Keyword(s):  
Tax Structure ◽  
Optimal Tax ◽  
Optimal Tax Structure

Social Status, Conspicuous Consumption Levies, and Distortionary Taxation

2015 ◽  
Vol 15 (4) ◽  
pp. 1705-1729
Author(s):  
Sanghyun Hwang ◽  
Kadir Nagac
Keyword(s):  
Social Status ◽  
Income Taxes ◽  
Theoretic Model ◽  
Tax Structure ◽  
Positional Goods ◽  
Optimal Tax ◽  
Status Effect ◽  
Status Seeking ◽  
Game Theoretic ◽  
Optimal Tax Structure

AbstractThis paper explores the optimal tax structure in the presence of status effect. When the consumption of certain goods affects one’s social status, this creates an externality, which results in two opposite effects in a society. Seeking higher status through “positional goods” gives individuals much incentive to supply labor but still allocates income for less “nonpositional goods” as well. In this case, differentiated taxes on positional goods work as corrective instruments to internalize the social cost stemming from status seeking. Furthermore, the differentiated taxes generate revenue that can be used to alleviate preexisting income tax distortion. We develop a game-theoretic model in which each individual with different labor productivity unknown to the others engages in a status-seeking game, where government has a revenue requirement. Then we show that under a condition in which utility is separable between positional goods and leisure, a revenue-neutral shift in the tax mix away from nonlinear income taxes toward positional-good taxes enhances welfare. Hence, the differentiated taxes on positional goods are necessary together with the nonlinear income taxes for an optimal tax structure. Moreover, the differentiated taxes on positional goods could reduce the progressivity of the nonlinear income taxes, which is the case that can easily apply to practical use.

Preferences, Tax Structure and Tax Reform: Theory and Evidence

1975 ◽  
Vol 3 (1) ◽  
pp. 56-69 ◽  
Author(s):  
Shlomo Maital
Keyword(s):  
Tax Reform ◽  
Tax Structure ◽  
Indirect Taxation ◽  
Tax System ◽  
The Past ◽  
Pure Public Good ◽  
Indirect Taxes ◽  
Current Shift ◽  
Optimal Tax Structure ◽  
The U.S

When the structure of tax revenues–the proportion of revenues earned by income, consumption and wealth taxes–is treated as a pure public good, a useful framework emerges for analyzing interrelationships among taxpayers' preferences, tax structure and tax reform. The “optimal” tax structure is defined and used to outline several conjectures about the current shift from direct to indirect taxation, evident particularly in Europe. Attention is then focused on the U.S. tax system. The structure of the tax system is shown to have changed very little in the past two decades. In contrast, interview surveys carried out over the past thirty years indicated a long-standing shift in taxpayers' preferences toward indirect taxes. Implications are drawn regarding tax reform.

On the Optimality of a Consumption Tax

1986 ◽  
Vol 14 (4) ◽  
pp. 480-488
Author(s):  
Douglas J. Young
Keyword(s):  
Current System ◽  
Income Taxation ◽  
Consumption Tax ◽  
Life Cycle Model ◽  
Capital Income ◽  
Cycle Model ◽  
Optimal Tax ◽  
Parameter Values ◽  
Optimal Tax Structure

Feldstein (1978) employed a simple life-cycle model to argue that a consumption tax would substantially reduce the excess burden of the current system of labor and capital income taxation. This note provides a general characterization of the optimal tax structure for this model. Maintaining Feldstein's other assumptions about parameter values, it is optimal to tax or subsidize capital income according to whether labor supply is an increasing or decreasing function of the wage rate.

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