To master the fundamentals of the economics of taxation
Course outline:
Foreword
Modern Public Finance: Why advanced?
- The dual approach of consumer choice
- Mechanism Design
- Welfare economics
Taxation: The conundrum Capital, consumption, income
- Consumption better than capital (Chamley-Judd)
- Income better than Consumption (Atkinson-Stiglitz)
- Capital better than Income (Allais)
Chap 1 Why Taxation
- Public Expenditures and Redistribution
- How to define inequality
- Hardy-Littlewood-Polya Theorem
- Progressivity and Inequality: Jackobson Theoerem
- Helping the poor
- Universal vs targeted benefits
- EITC vs NIT
Chap 2 What Taxes
- Firms vs Households
- How to defend the corporate tax?
- Globalization and the Destination Based Cash Flow Tax (Devereux Auerbach)
- Capital vs Labor (Human Capital)
- Capital: Income vs Stock; Inheritance or Wealth
- Income vs Consumption
Chap 3 First best taxation
- The second theorem of Welfare Economics
- The curse of talented people
- Examples of first best taxes: Pigouvian and Land taxes (The Henry Georges theorem)
- The Diamond Mirrlees Production efficiency Lemma: The foundation of VAT
Chap 4 Second best taxation and the efficiency cost of taxation
- Substitution vs Income effect
- The measure of the deadweight loss with the surplus measures
- Changes in behavior, labor, saving, risk-taking
- Changes in equilibrium and pass through
- Partial Equilibrium (competitive vs non-competitive environment)
- General Equilibrium (Haberger)
- Dupuit’s Approximation formula and the marginal cost of public fund
Chap 5 Social Objectives
- Social Welfare functions and Social welfare weights/ Rawls Vs Utilitarianism
- Non Welfarist view-points
- The Saez Stancheva generalization
- Justice in taxation: The equal sacrifice
Chap 6 Ramsey Taxation
- The inverse elasticity rule
- Generalizations
- The Scope of the Atkinson-Stiglitz Theorem
Chap 7 Capital taxation
- The Chamley-Judd result (Straub and Werning result)
- The Overlapping generation framework and positive result
- The Piketty-Saez approach
Chap 8 Optimal Non-Linear Taxation: Analytics
- From Mirrlees to Saez
- The formulation as a Mechanism design pb
- The principle of taxation
- The Spence-Mirrlees condition as as sorting condition
- Derivation of the pb as the solution of a optimal control pb
- Bunching
- The small perturbation approach
- The ETRI as the sufficient statistics
Chap 9 Applications of the Optimal Non-linear taxation
- The ABC formula
- The optimal top tax rate
- EITC vs NIT
Chap 10 On the research frontier
- Nudge, behavioral economics and optimal tax results
- More than 1 heterogeneity parameter
- Optimal tax in an open economy
- Optimal tax and Job search