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Title:Measuring tax efficiency : a tax optimality index PDF Logo
Authors:Raimondos-Møller, Pascalis
Woodland, Alan D.
Issue Date:2004
Series/Report no.:CESifo working papers 1236
Abstract:This paper introduces an index of tax optimality that measures the distance of a current tax structure from the optimal tax structure in the presence of public goods. In doing so, we derive a [0, 1] number that reveals immediately how far the current tax configuration is from the optimal one and, thereby, the degree of efficiency of a tax system. We call this number the Tax Optimality Index. We show how the basic method can be altered in order to derive a revenue equivalent uniform tax, which measures the size of the public sector. A numerical example is used to illustrate the method developed.
Subjects:tax optimality index
excess burden
distance function
JEL:H41
H21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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