Economics Dictionary of ArgumentsHome
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| Luxury tax: luxury tax is a tax applied to goods and services considered non-essential or luxurious. Its purpose is to generate revenue while discouraging excessive spending on luxury items, and it often targets wealthier individuals to address income inequality._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Chris William Sanchirico on Luxury Tax - Dictionary of Arguments
Parisi I 325 Luxury tax/Sanchirico: Charging each individual in lump sum merely what she would have paid in luxury tax would leave that individual able to afford the consumption bundle she would have chosen under the luxury tax. Yet, relative prices under the luxury tax differ from relative prices under such a revenue-equivalent lump sum charge. Hence, the consumption bundle that the individual would have chosen under the luxury tax would not maximize her utility under the revenue-equivalent lump sum charge. In other words, the individual could attain greater utility under the revenue-equivalent lump sum charge than under the luxury tax. It follows that a lump sum tax that is utility-equivalent to the luxury tax (taken alone) must collect more from each individual than would be collected from her by the luxury tax. Any differential taxation of consumption spending, broadly defined, would be similarly inefficient. This includes subsidies (or tax rate reductions) for milk or other staples. It also includes taxing capital income, which in effect differentially taxes current and future consumption. Differential commodity taxation is the earliest application of the tax substitution argument (Atkinson and Stiglitz, 1976(1); Deaton, 1979(2),8 1981; Deaton and Stern, 1986(3)). >Tax System, >Tax Competition. 1. Atkinson, Anthony B. and Joseph E. Stiglitz (1976). “The Design of Tax Structure: Direct Versus Indirect Taxation.” Journal of Public Economics 6: 55–75. 2. Deaton, Angus (1979). “Optimally Uniform Commodity Taxes.” Economics Letters 2: 357–361, corrected in Deaton and Stern (1986). 3. Deaton, Angus and Nicholas Stern (1986). “Optimally Uniform Commodity Taxes, Taste Differences and Lump-Sum Grants.” Economics Letters 20: 263–266. Chris William Sanchirico. “Optimal Redistributional Instruments in Law and Economics”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University. >Taxation, >Tax Avoidance, >Tax Competition, >Tax Compliance, >Tax Evasion, >Tax Havens, >Tax Incidence, >Tax Loopholes, >Tax System. _____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Sanchirico, Chris William Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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