Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18875
Authors: 
Raimondos-Møller, Pascalis
Woodland, Alan D.
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 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

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