Optimal Taxation

Research Report

Optimal Taxation

From The Encyclopedia of Taxation and Tax Policy
October 1, 1999

Abstract

Optimal taxation is a set of normative prescriptions for tax policy usually based on maximizing social welfare for a given revenue requirement. Optimal tax theory addresses such questions as: Should the government use income or commodity taxes? Within commodity taxes, how should tax rates vary across commodities? How progressive should the tax system be? Optimal tax theory encompasses a range of models that focus on particular aspects of the tax system.

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.