SFB 303 Discussion Paper No. A - 245

Author: Guesnerie, Roger, and Michael Jerison
Title: Taxation as a Social Choice Problem, The Scope of the Laffer Argument
Abstract: This paper studies the form of the tax equilibrium set in simple Diamond-Mirrlees models and characterizes the corresponding Laffer curves. The curves need not ever slope downward and can have multiple local maxima. Local information about them is thus not sufficient to place restrictions on optimal choice among tax systems. In this simple framework, the problem of choice among tax systems is shown to have no more structure than an abstract social choice problem
Keywords: Laffer curve, tax equilibrium, social choice, optimal taxation
JEL-Classification-Number: 020, 320
Creation-Date: August 1989
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