The promised “Part 4b” is still in the pipeline – it’ll appear at some point.
This time we discussed consumption taxes, and the fact that we may not like the idea of taxing consumption differently based on when it occurs.
I avoided talking about commodity taxation and then talking about the result where we don’t want to tax intermediate inputs. I also avoided going too far into the debate around the Atkinson-Stiglitz paper (Saez here has a great piece(REPEC)). I feel that when just describing the idea of income, poll, and consumption taxes adding these additional issues would add more confusion and less understanding. I could have added a bit more at the point where I was talking about Ramsey taxation – especially the point that if people with different ability have different preferences we can use variable consumption taxation as a form of redistribution. The idea of a progressive consumption tax is interesting. However, the goal in this article was to make consumption tax relatable to forms of income tax – hopefully that got through 😛
I’m saving a lot of these addition factors for when we introduce the talk on progressivity and the equity-efficiency trade-off for the next article. Urg. Let us see if I can manage it in one article!
I have avoided using the term “marginal tax rate”. I don’t know how I’ve done this. I suspect it will make an appearence in the next article 😉