The Theory of Taxation and Public Economics
Louis Kaplow
Princeton University Press 2008


Table of Contents:
Preface xvii
CHAPTER 1: Introduction 1

PART I: FRAMEWORK
CHAPTER 2: An Integrated View 13
CHAPTER 3: The Social Objective 35

PART II: OPTIMAL TAXATION
CHAPTER 4: Optimal Income Taxation 53
CHAPTER 5: Elaboration and Extensions 80
CHAPTER 6: Income and Commodity Taxation 122

PART III: GOVERNMENT EXPENDITURES
CHAPTER 7: Transfer Payments 151
CHAPTER 8: Goods and Services 179

PART IV: ADDITIONAL ASPECTS OF TAXATION
CHAPTER 9: Taxation of Capital 221
CHAPTER 10: Taxation of Transfers 249
CHAPTER 11: Taxation and Social Security 275
CHAPTER 12: Taxation of Families 315

PART V: DISTRIBUTIVE JUSTICE AND SOCIAL WELFARE
CHAPTER 13: Welfare 347
CHAPTER 14: Social Welfare Function 370
CHAPTER 15: Other Normative Criteria 391
CHAPTER 16: Conclusion 407

References 417
Index 455



The Theory of Taxation and Public Economics presents a unified conceptual framework for analyzing taxation--the first to be systematically developed in several decades. An original treatment of the subject rather than a textbook synthesis, the book contains new analysis that generates novel results, including some that overturn long-standing conventional wisdom. This fresh approach should change thinking, research, and teaching for decades to come.
Building on the work of James Mirrlees, Anthony Atkinson and Joseph Stiglitz, and subsequent researchers, and in the spirit of classics by A. C. Pigou, William Vickrey, and Richard Musgrave, this book steps back from particular lines of inquiry to consider the field as a whole, including the relationships among different fiscal instruments. Louis Kaplow puts forward a framework that makes it possible to rigorously examine both distributive and distortionary effects of particular policies despite their complex interactions with others. To do so, various reforms--ranging from commodity or estate and gift taxation to regulation and public goods provision--are combined with a distributively offsetting adjustment to the income tax. The resulting distribution-neutral reform package holds much constant while leaving in play the distinctive effects of the policy instrument under consideration. By applying this common methodology to disparate subjects, The Theory of Taxation and Public Economics produces significant cross-fertilization and yields solutions to previously intractable problems.
Louis Kaplow is the Finn M. W. Caspersen and Household International Professor of Law and Economics at Harvard, a research associate at the National Bureau of Economic Research, and a fellow of the American Academy of Arts and Sciences. He has published widely on the theory of taxation and public economics.
Review:
"This is a very ambitious project which has the quality of proposing a unified view of all these topics. Moreover, on the various aspects of taxation, the reader will find an interesting critical survey and a valuable source of information about the literature and the pending questions."--Marc Fleurbaey, Social Choice and Welfare
Endorsements:
"Louis Kaplow brings innovative ideas to the difficult issues of income taxation and other fiscal instruments. The clarity of his writing and the novelty of his analysis make this book a pleasure to read."--Martin Feldstein, Harvard University
"This clear and insightful examination of income taxation and its link to analyzing other government policies will be informative and valuable for students and researchers alike."--Peter Diamond, Massachusetts Institute of Technology
"This rigorous book illuminates current policy issues in government taxation and spending, exposes the logical flaws in many common arguments, and nicely clarifies the interaction between equity and efficiency in taxes and transfers. It will serve well as a text and reference for advanced students of public economics, and it will also reward a close reading by their teachers."--Joel Slemrod, University of Michigan
"Louis Kaplow's Theory of Taxation and Public Economics is a terrific text full of insight and new approaches to examining old issues in public finance. Kaplow, a brilliant economist with a great talent for exposition, looks at things from fresh angles and explains them in new ways."--Laurence J. Kotlikoff, Boston University