This paper extends the Diamond overlapping-generations model with pay-as-you-go social security by allowing for variable retirement age and for distortionary taxation of earnings and interest income. The tax rates are shown to depend on whether or not debt policy is available, and on the...

The literature suggests that the concern for economic efficiency calls for individual-based taxation of married couples with a higher rate on the primary earner. This paper reconsiders the choice of tax unit in the Becker model of household production. In the absence of restrictions on the use...

We examine how the overlap of tax bases in a federal economy affects economic growth. In our model the central and local governments have different objectives and each government finances its own public service using taxes levied on the same income tax base. The optimal tax rate for the...

It is often argued that without tax-exemptions for the production sector environmental tax reforms substantially reduce profits and endanger employment. We challenge this view and investigate the consequences of both a small and alarge tax reform in the case of a monopoly. We show that these...

This paper analyzes taxes and transfers in an economy with three distinct levels of government. It is assumed that the different levels of government raise revenue through distortionary income taxation, resulting in vertical fiscal externalities. We show how to implement a socially optimal...

A dynamic equilibrium model of an economy with underground trade is developed in which agents devote effort to search, building up networks of underground contacts. The model is used to illustrate dynamic responses to tax increases. The model is shown to be consistent with the stylized fact that...

A model is presented for simulating the level of taxes imposed on highly skilled labor. The effective average tax rate, defined as the relative wedge between employment costs and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent...

This paper considers an optimal income tax cum higher education policy. It shows that in the presence of an optimal income tax system higher education should be taxed rather than subsidized. Furthermore, income taxes should become less progressive when an optimal higher education policy is...

Assuming that higher traveling expenses reduce traveling time, this paper considers tax deductibility of commuting expenses when a distorting wage tax is levied. While the decision on commuting expenses would not be distorted if traveling costs were completely deductible, taxation would still...

This paper examines a Waste Management Organisation's (WMO) pricing options to implement the Pareto-efficient allocation in an economy where materials are first extracted, then used for producing a consumption good and finally recycled or landfilled. The composition of consumption waste results...