Ramsey Rule: The Ramsey Rule in taxation suggests setting tax rates inversely proportional to the elasticities of demand for different goods. It advises imposing higher taxes on goods with inelastic demand (less responsive to price changes) and lower taxes on goods with elastic demand (more responsive to price changes) to minimize distortion and achieve efficient taxation. See also Taxation._____________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. |