We analytically and quantitatively examine a prominent justification forcapital income taxation: goods preferred by … of income and consumption and find that, when ability ispositively related to a preference for a good, optimal marginal … commoditytaxes on this good may be regressive: i.e., declining with income. We derivean analytical expression for optimal commodity …

We analytically and quantitatively examine a prominent justi…cation for capital income taxation: goodspreferred by … functions of income and consumption and …nd that, when ability is positivelyrelated to a preference for a good, optimal marginal … commodity taxes on this good may be regressive: i.e.,declining with income. We derive an analytical expression for optimal …