On the Marginal Cost of Public Funds and Tax Design with Household Production

• Main Authors: LIN, CHUN-HUEI, 林俊輝
• Other Authors: SU, JAIN-RONG
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/05135001788968514537

碩士 === 國立臺北大學 === 財政學系 === 92 === The purpose of this study is to investigate the issue of marginal cost of public funds (MCF) and tax design in an economy with household production. Although the MCF has been regarded as a critical element in the literature of tax design for long, and many recent studies on the theory of taxation have focused on the issue optimal taxation arising from the untaxability of household production, it has not yet been done much on effects of the untaxability of household production on the measure of MCF and in turn on the design tax structure. Based on the theoretical framework by Sandmo (1992 and 1998) and Su (2001), this study shows that in a many-consumer economy with household production, the magnitude of MCF associated with distortionary taxes may not be greater than one. It will depend on the distribution characteristic of the marginal tax rate, the elasticity of the tax base with respect to tax rate and the overall tax structure. As a consequence, household production is of importance to the design of tax structure.