Appeal to the delegation setup to study whether one could justify the use of a discrete number of...

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Appeal to the delegation setup to study whether one could justify the use of a discrete number of tax rates when there is a continuum of taxable commodities. The setup could involve two different authorities, say the government maximizing a social welfare function, and a tax authority which has better information about demand functions for consumption goods. The goal of the tax authority could be to maximize tax receipt. There is no transfer from the government to the tax authority.
	
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II. TAXATION DES LIVRAISONS DE BIENS ET DES PRESTATIONS DE SERVICES DANS LES ÉTATS MEMBRES SELON  LES CATÉGORIES 
DE L'ANNEXE III DE LA DIRECTIVE 2006/112/CE 
0 = taux zéro (exonération avec droit à remboursement); [ex] = exonéré 
 Catégorie BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK 
1 2
1.  Produits alimentaires XXXXXXXXXX4 5, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
25 
3
 XXXXXXXXXX,6 4, XXXXXXXXXX XXXXXXXXXX 
 XXXXXXXXXX, XXXXXXXXXX       
4 5
2. Distribution d'eau XXXXXXXXXX [ex] 8 5,5 [ex] XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
11 
 XXXXXXXXXX                  
6 7
 XXXXXXXXXX 2, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
3. Produits 
pharmaceutiques 
 XXXXXXXXXX, XXXXXXXXXX         
 XXXXXXXXXX, XXXXXXXXXX XXXXXXXXXX 
6 8
4. Équipement médical XXXXXXXXXX 5, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
pour handicapés 
 XXXXXXXXXX 25  19       [ex] [ex]  
Sièges d’enfant pour XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX XXXXXXXXXX XXXXXXXXXX 
voitures automobiles 
 
9
5. Transport de XXXXXXXXXX [ex] XXXXXXXXXX,5 [ex] XXXXXXXXXX [ex] 25 0 [ex] XXXXXXXXXX, XXXXXXXXXX 
personnes (+ voir n° 
10
 XXXXXXXXXX     [ex] 15 [ex] XXXXXXXXXX  
VI) 
 XXXXXXXXXX          
11
6. Livres XXXXXXXXXX,5 4 5, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
 XXXXXXXXXX, XXXXXXXXXX        
 XXXXXXXXXX22        
 XXXXXXXXXX
Livres sur d'autres XXXXXXXXXX23 4 5, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
46
19, XXXXXXXXXX,5 
types de support 
physique 
12 13
Journaux quotidiens XXXXXXXXXX,5 4 2,1 13, XXXXXXXXXX XXXXXXXXXX, XXXXXXXXXX 
 XXXXXXXXXX, XXXXXXXXXX   
21                           
12 13
Périodiques XXXXXXXXXX,5 4 2,1 13, XXXXXXXXXX XXXXXXXXXX,5 19 0 [ex] 0 
 
 XXXXXXXXXX, XXXXXXXXXX23 6

2 XXXXXXXXXX22  ...

David · Accepted Answer

If we analyze different economies we found tax rates vary significantly. As per the research done 
by John Alm, 1996 the income tax would be such that it should be imposed on constant marginal 
tax rates on some broad tax bases above some determined level of income which is defined as 
per law after removing all deductions and exemptions. It will help to reduce the compliance costs 
significantly. (John Alm, 1996). 
The other benefits that discrete no. of tax rates provides when there is continuum of tax 
commodities is that it allows the lower marginal tax rates to generate large amount of revenue for 
the government. It also decreases the behavior which relates to non-compliance and other issues. 
Broadly defined tax bases allow lower. It also ensures that the people with very low income will 
have to pay negative taxes so that majority of their income will be used to meet their daily needs. 
One important and interesting way to charge discrete no. of tax rates is to charge both direst and 
indirect tax rates.

Appeal to the delegation setup to study whether one could justify the use of a discrete number of tax rates when there is a continuum of taxable commodities. The setup could involve two different...

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