Revenue-maximizing tax rates in personal income taxation in the presence of consumption taxes: a note |
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| Authors: | José Félix Sanz-Sanz |
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| Institution: | Universidad Complutense de Madrid, Pozuelo de Alarcon, Spain |
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| Abstract: | This article computes revenue-maximizing tax rates in personal income taxes in the presence of consumption taxes. It finds that the traditional Laffer analysis, which neglects the effects of marginal tax rates on consumption, overestimates the magnitude of revenue-maximizing tax rates. The bias caused by this oversight is computed. |
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| Keywords: | Marginal tax rates Laffer curve consumption taxes tax revenue tax behaviour |
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