In a recent contribution, H. Naito (1999) has shown that production efciency may be violated in the optimum with non-linear income taxation. Using a slightly simpler framework, this paper complements Naito's analysis in showing that production e ciency does not hold in the optimum with (i) non-linear and (ii) linear income taxation provided that second best and rst best do not coincide. These n...

Redistributive Taxation and Personal Bankruptcy in US States Both personal bankruptcy and redistributive taxes can insure households’ consumption risk and both vary considerably across US states. We derive sufficient conditions under which more redistributive taxation makes bankruptcy exemptions less attractive both for the intratemporal insurance and for inter-temporal consumption smoothing. E...

Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor payments. The wealthy pay more, but pay less in perce...

We analyze non-cooperative commodity taxation in a symmetric twocountry trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exact...

The present paper analyses the challenge to redistribution programs posed by an increase in skill premium. The increase in skill premium, which we observe in most OECD countries, affects taxation through its effect on education and migration incentives. We demonstrate that in countries with a relatively egalitarian wage distribution, the response to an increased gap in wages is likely to be inc...

In the quasi-linear model of Lagos and Wright [A unified framework for monetary theory and policy analysis, J. Polit. Econ. 113 (2005) 463—484], money is essential and—if lump-sum taxation is feasible—the Friedman rule implements the first-best allocation. In this paper, I impose the additional restriction of voluntary trade; so that (coercive) lump-sum taxation is infeasible. Despite this adde...

This paper identifies six phases in the development of the compliance costs of taxation, in an Australian context. Estimates of the compliance costs of personal and public companies’ income taxation are presented, and an international comparison cautiously made. Major policy issues related to compliance costs are considered. Cost-reducing measures are identified and classified. Specific proposa...

This paper reviews the recent debate on the role of aid in providing finance, in changing policies in recipient countries, and in transmitting knowledge. It argues that where economic reforms are recent, as in much of Africa, donors can play an important signalling role. This potential remains untapped because aid allocations have been largely based on political considerations. Donors fear " ai...

We study the e¤ects of progressive labor income taxation in an otherwise standard NK model. We show that progressive taxation (i) introduces a trade-o¤ between output and in‡ation stabilization and a¤ects the slope of the Phillips Curve; (ii) acts as automatic stabilizer changing the responses to technology shocks and demand shocks (iii) alters the prescription for the optimal monetary policy. ...

This paper develops an endogenous growth model with redistributive taxation in which the growth rate of the economy affects the agents’ preferences over redistributive policies, and therefore, the equilibrium level of taxation. The main mechanism through which the growth rate affects policy preferences is by changing the ability of the agents to learn their positions in the future distribution ...