An Inverse-Ramsey Tax Rule

Luca Micheletto, Dylan T. Moore, Daniel Reck and Joel Slemrod

No 34419, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Traditional optimal commodity tax analysis, dating back to Ramsey (1927), prescribes that to maximize welfare one should impose higher taxes on goods with lower demand elasticities. Yet policy makers do not stress minimizing efficiency costs as a desideratum. In this note we revisit the commodity tax problem, and show that the attractiveness of the Ramsey inverse-elasticity prescription can itself be inverted if the tax system is chosen – or at least strongly influenced – by taxpayers who are overly confident of their ability, relative to others, to substitute away from taxed goods.

JEL-codes: H20 H21 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-pbe and nep-pub
Note: PE
References: Add references at CitEc
Citations:

Published as Luca Micheletto & Dylan T. Moore & Daniel Reck & Joel Slemrod, 2025. "An inverse-Ramsey tax rule," Journal of Public Economics, vol 251.

Downloads: (external link)
http://www.nber.org/papers/w34419.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Journal Article: An inverse-Ramsey tax rule (2025)
Working Paper: An Inverse-Ramsey Tax Rule (2025)
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: https://EconPapers.repec.org/RePEc:nbr:nberwo:34419

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34419
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().