Why Do We Redistribute So Much but Tag So Little? the Principle of Equal Sacrifice and Optimal Taxation
NBER WORKING PAPER SERIES WHY DO WE REDISTRIBUTE SO MUCH BUT TAG SO LITTLE? THE PRINCIPLE OF EQUAL SACRIFICE AND OPTIMAL TAXATION Matthew C. Weinzierl Working Paper 18045 http://www.nber.org/papers/w18045 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 May 2012 I am grateful to Felix Bierbrauer, Kim Clausing, Raj Chetty, Mihir Desai, Rafael di Tella, Amy Finkelstein, Victor Fleischer, John Friedman, Alex Gelber, Caroline Hoxby, Bas Jacobs, Louis Kaplow, Wojciech Kopczuk, Camille Landais, Ben Lockwood, Greg Mankiw, Yoram Margalioth, Joe Mazor, Jean-Baptiste Michaud, Je¤ Miron, Alex Raskolnikov, Meg Rithmire, Julio Rotemberg, Emmanuel Saez, Florian Scheuer, Ali Shourideh, Stefanie Stantcheva, Alain Trannoy, Aleh Tsyvinski, Glen Weyl, John Weymark, and Danny Yagan for helpful discussions. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2012 by Matthew C. Weinzierl. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Why do we Redistribute so Much but Tag so Little? The principle of equal sacrifice and optimal taxation Matthew C. Weinzierl NBER Working Paper No. 18045 May 2012, Revised August 2012 JEL No. D63,H2,H21 ABSTRACT The workhorse model of optimal taxation strongly recommends tagging, but its use in policy is limited.
[Show full text]