Revenue-Maximising Tax Rates in Personal Income Taxation in the Presence of Consumption Taxes: A note

José Félix Sanz-Sanz

No 19275, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: This note computes revenue-maximising tax rates in personal income taxes in the presence of consumption taxes. It finds that the traditional Laffer analysis, which neglects the effects of marginal tax rates on consumption, overestimates the magnitude of revenue-maximising tax rates. The bias caused by this oversight is computed.

Keywords: Marginal tax rates; Laffer curve; Consumption taxes; Tax revenue; Tax behaviour (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:19275

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