财政学chap14.ppt

Chapter 14 – Efficient and Equitable Taxation Public Finance Optimal Commodity Taxation Assume that the goal is to finance expenditures with a minimum of excess burden. Assume lump sum taxes are infeasible. Three commodities: Good X, Y, and leisure Prices PX, PY, and w. Optimal Commodity Taxation Time endowment is fixed at: Optimal Commodity Taxation:Case 1 – All Goods Can Be Taxed If all commodities can be taxed, imposing equal ad-valorem tax rates yields: Optimal Commodity Taxation:Case 1 – All Goods Can Be Taxed In this case, the inability to impose a lump sum tax is irrelevant. The government can effectively take away a lump sum amount through equal taxes on all commodities (including leisure). No excess burden. Optimal Commodity Taxation:Case 2 – Not All Goods Can Be Taxed May be impossible to tax nonmarket work. Assume only taxes can be applied to goods X and Y. In general, some excess burden is inevitable. Key question is how to select rates on X and Y to minimize excess burden subject to the revenue constraint. Optimal Commodity Taxation:Ramsey Rule Consider the idea of marginal excess burden The additional inefficiency from incrementally raising a tax by a small amount Figure 14.1 shows the initial excess burden as a triangle (abc) and the marginal excess burden as a trapezoid (fbae) Figure 14.1 Optimal Commodity Taxation:Ramsey Rule The marginal excess burden of taxing good X is approximately: ΔX. The marginal tax revenue raised is approximately: X1. Therefore the marginal excess burden per dollar of tax revenue is: Optimal Commodity Taxation:Ramsey Rule Similar reasoning is used for good Y. Optimization therefore leads to: Optimal Commodity Taxation:Ramsey Rule Reinterpreted Recall the formula for excess burden for good X: Optimal Commodity Taxation:Ramsey Rule Reinterpreted Setting up the LaGrangian: Optimal Commodity Taxation:Ramsey Rule Reinterpreted Solving leads to a relationship between tax rates and elasticities: Optimal Commodity Taxati