• Table of Contents
    • Abstract
    • Keywords
    • Article
      • Income taxation
        • Model
        • Linear income tax
        • Nonlinear income tax
        • Extensions
      • Commodity taxation
        • Commodity taxation with income taxation
        • The Ramsey problem: commodity taxation alone
        • Applications
      • Optimal tax systems
    • See Also
    • Bibliography
    • How to cite this article

optimal taxation

Louis Kaplow
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

Optimal taxation concerns how various forms of taxation should be designed to maximize social welfare. The task requires an integrated consideration of the revenue-raising and distributive objectives of taxation. The central instrument in developed economies is the labour income tax, the analysis of which was pioneered by Mirrlees (1971). Subsequently, Atkinson and Stiglitz (1976) showed how commodity taxes should be set in the presence of an optimal income tax, the results differing qualitatively from, and in important respects displacing, the teachings derived from Ramsey's (1927) seminal analysis of the pure commodity tax problem.
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Keywords

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Article

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How to cite this article

Kaplow, Louis. "optimal taxation." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 16 September 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_O000034> doi:10.1057/9780230226203.1226

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