Economics at your fingertips  

Optimal sin taxes in the presence of income taxes and health care

Jiunn Wang, Laura Marsiliani and Thomas Renström

Economics Letters, 2020, vol. 186, issue C

Abstract: We present a unified approach to analyze sin taxes, by allowing for a non-paternalistic view, stemming from crowding-out externalities, in addition to the paternalistic view. Analytical results show the additive property between the Pigouvian and the efficiency elements in optimal sin taxes. The Pigouvian element can be decomposed into externality components additively. Although the Pigouvian elements are lower in the second-best, the second-best optimal sin taxes are not necessarily lower due to the presence of the efficiency element. Calibration results show that the implementation of sin taxes has double-dividends, which improve not only health but also economic performance and welfare.

Keywords: Optimal taxation; Sin tax; Pigouvian tax; Income tax; Health care (search for similar items in EconPapers)
JEL-codes: D91 H21 I18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.econlet.2019.108767

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2021-10-23
Handle: RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519303854