The theoretical analysis of optimal commodity taxation is advanced, but there is only limited empirical evidence to guide commodity tax policies. With this paper, we contribute to this body of literature by empirically examining, using Finnish consumption data, the relation between working...

The standard theory of optimal income taxation under uncertainty has been developed under the assumption that individuals maximise expected utility. However, prospect theory has now been established as an alternative model of individual behaviour, with empirical support. This paper explores the...