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Title:A new approach to optimal commodity taxation PDF Logo
Authors:Homburg, Stefan
Issue Date:2004
Series/Report no.:CESifo working papers 1231
Abstract:This paper makes a fresh attempt at characterizing optimal commodity taxes. Under the usual assumptions, an extremely simple expression of second-best commodity taxes is derived, showing tax rates as functions of observable variables only, rather than as functions of unobservable variables such as compensated cross elasticities. The main formula is independent of special preferences, and independent of the number of commodities. It has a simple economic meaning and could be particularly useful for empirical research. Examples and remarks on the normalization problem are provided.
Subjects:optimal commodity taxation
Ramsey rule
JEL:H21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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