The Second-Best Theory of Taxation in One-Consumer Economies with Linear Production Technology
Abstract
Chapter 13 develops the deadweight efficiency loss or excess burden of distorting taxes in the simplest setting of linear production technology with constant producer prices. Among the topics covered are the total loss from a number of taxes, the marginal loss from changing a single tax, the optimal pattern of commodity taxes to minimize loss for a given amount of tax revenue, the associated inverse elasticity rule, the deadweight loss from income taxes, Besley and Jewitt's analysis of the necessary and sufficient conditions for proportional taxation, Feldstein's elasticity of taxable income measure of loss, and the loss implications ...
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