This paper uses a finite mixture model to uncover heterogeneous income tax rate perceptions, establishing four new results. First, almost half of respondents do not distinguish between marginal and average tax rates. Second, roughly 30 percent of respondents know the statutory marginal tax rates schedule (and answer questions accordingly). Third, among respondents who think all income is taxed ...

In a recent working paper, Plesko (1999) uses confidential tax return data to evaluate alternative measures of corporate average and marginal tax rates and concludes “The results suggest that commonly used measures of average tax rates provide little insight about annual corporate tax burdens, and may introduce substantial bias into statistical models. Marginal tax rate proxies perform better, ...

Bovenberg and de Mooij (1994) showed that, in the presence of preexisting distorting taxes, the optimal pollution tax typically lies below social marginal damages. The authors view this result as a refutation of the so-called "double dividend hypothesis," which suggests that a tax on pollution can both improve the environment and reduce distortions in the tax system. Their paper spawned a large...

The vast increase in foreign assets globally has raised interest in how the home country should tax profits flowing from these investments. Broadly speaking, countries have chosen either to exempt foreign income from taxation or to subject foreign income to taxation with credits/deductions given for foreign taxes paid. Recent research has focused on the effect of these foreign income tax rules ...

Comprehensive tobacco control policies include high taxes. This paper describes the tobacco excise structure in Indonesia from 2007 to 2009. The design of the tobacco excise system contributes to neutralizing the effect of a tax increase on consumption. Wide gaps in tax rates allow for the availability of low-priced products, and consumers can substitute to cheaper products in response to price...

The purpose of this paper is to present an exercise where we identify optimal income tax rules according to various social welfare criteria, keeping fixed the total net tax revenue. To this end, we estimate a microeconomic model with 78 parameters that capture heterogeneity in consumptionleisure preferences for singles and couples as well as in job opportunities across individuals based on deta...