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THE CONSEQUENCES OF TAXATION

Published online by Cambridge University Press:  23 May 2006

Joel Slemrod
Joel Slemrod
Affiliation:
Stephen M. Ross School of Business, University of Michigan
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Abstract

The consequences of taxation matter for the optimal design of the tax system. Those consequences depend on behavioral responses to taxation, as summarized by the elasticity of taxable income. Although this elasticity depends on characteristics of preferences, such as the elasticity of substitution between goods and leisure, it also depends on the avoidance technology, and on the response of government to avoidance behavior. It depends on the size of states, and the amount of tax coordination and harmonization. To some degree the elasticity of response can be affected by government policies, and the government need not accept it passively, but rather should put in place policies that optimally determine it.

Type
Research Article
Information
Social Philosophy and Policy , Volume 23 , Issue 2 , July 2006 , pp. 73 - 87
Copyright
© 2006 Social Philosophy and Policy Foundation

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