
How is the optimal level of Pigouvian taxation influenced by distributive concerns? With second-best instruments, a higher level of income redistribution calls for a lower level of Pigouvian taxation. More redistribution implies higher distortions from income taxation. Pigouvian tax revenues become more valuable, and the optimal level of environmental taxation decreases. With first-best instruments, however, the relation between levels of redistribution and Pigouvian taxation is reversed. So second-best Pigouvian taxes are very different from their first-best counterpart – despite apparently identical first-order conditions.
Optimal Income Taxation, Pigouvian taxation, comparative statics, externalities, second-best, Internalisierung externer Effekte, ddc:330, H23, Second Best, Ökosteuer, externalities, second-best, Einkommensumverteilung, comparative statics, Einkommensteuer, Optimale Besteuerung, D62, Pigouvian taxation, optimal income taxation, H21, Theorie, jel: jel:D62, jel: jel:H23, jel: jel:H21
Optimal Income Taxation, Pigouvian taxation, comparative statics, externalities, second-best, Internalisierung externer Effekte, ddc:330, H23, Second Best, Ökosteuer, externalities, second-best, Einkommensumverteilung, comparative statics, Einkommensteuer, Optimale Besteuerung, D62, Pigouvian taxation, optimal income taxation, H21, Theorie, jel: jel:D62, jel: jel:H23, jel: jel:H21
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