In Praise of Frank Ramsey's Contribution to the Theory of Taxation

Joseph Stiglitz

No 20530, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Frank Ramsey's classic paper "A contribution to the theory of taxation" gave rise to the modern theory of optimal taxation. This paper traces the literature that grew out of Ramsey's 1927 paper and assesses which of its key insights has proven robust. Though the path breaking work of Peter Diamond and James Mirrlees showed that Ramsey's results could be generalized in some important ways, other work showed that the domain of applicability of Ramsey's original insights may be more limited: changes in assumptions about the set of feasible taxes (not allowing certain taxes, or allowing a progressive income tax or non-linear commodity taxes), and in particular about the taxation of pure rents, incorporating more explicitly distributional considerations, and/or recognizing the important ways in which our economy differs from the competitive model underlying Ramsey's analysis all change the optimal structure of commodity taxation in important ways.

JEL-codes: E62 H2 H21 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-acc, nep-his, nep-hpe, nep-mac, nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

Published as Joseph E. Stiglitz, 2015. "In Praise of Frank Ramsey's Contribution to the Theory of Taxation," Economic Journal, Royal Economic Society, vol. 0(583), pages 235-268, 03.

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Journal Article: In Praise of Frank Ramsey's Contribution to the Theory of Taxation (2015)
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