Revisiting the Classical View of Benefit‐Based Taxation

28 Pages Posted: 6 Jul 2018

See all articles by Matthew Weinzierl

Matthew Weinzierl

Harvard Business School - Business, Government and the International Economy Unit

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Date Written: July 2018

Abstract

This article incorporates into modern optimal tax theory the classical logic of benefit‐based taxation in which an individual's benefit from the activities of the state is tied to his or her income‐earning ability. First‐best optimal policy is characterised analytically as depending on a few potentially estimable statistics. Constrained optimal policy, with a Pareto‐efficient objective that trades off this principle and conventional utilitarianism, is simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those that match well several features of existing policies. This analysis thereby contributes to the theory of positive optimal taxation.

Suggested Citation

Weinzierl, Matthew, Revisiting the Classical View of Benefit‐Based Taxation (July 2018). The Economic Journal, Vol. 128, Issue 612, pp. F37-F64, 2018. Available at SSRN: https://ssrn.com/abstract=3208995 or http://dx.doi.org/10.1111/ecoj.12462

Matthew Weinzierl (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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