Taxes on consumption and tke laffer curve of the personal income tax

• José Félix Sanz-Sanz ^[1]
  1. [1] Universidad Complutense de Madrid

     Universidad Complutense de Madrid

     Madrid, España

     
• Localización: Papeles de trabajo del Instituto de Estudios Fiscales. Serie economía, ISSN 1578-0252, Nº 3, 2016, págs. 5-11
• Idioma: inglés
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• Resumen

  • 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.