Understanding Different Approaches to Benefit-Based Taxation
Despite substantial normative and positive appeal, the idea of benefit-based taxation plays a minor role in modern tax theory. One obstacle to its playing a greater role is confusion over the many ways in which theorists have argued that benefit-based taxes should be determined. In this paper, we provide clear descriptions and graphical representations of the four major approaches to benefit-based taxation: Lindahl (1919), Moulin (1987), Brennan (1976a), and Hines (2000). We also show how these approaches can be applied to Smith’s theory of so-called Classical Benefit-Based Taxation, the most prominent general benefit-based optimal tax framework and a potential focal point for generating consensus on the specifics of benefit-based taxation.
Keywords: benefit-based taxation; Taxation; Theory;
Citation:
Scherf, Robert, and Matthew C. Weinzierl. "Understanding Different Approaches to Benefit-Based Taxation." Harvard Business School Working Paper, No. 19-070, January 2019. View Details