An Optimal Tax System


  • Submitted December 2010.

  • The title is inspired by Slemrod (1990). The author would like to thank Steven Shavell and the referee for helpful comments and the John M. Olin Center for Law, Economics and Business at Harvard University for financial support.


A notable feature and principal virtue of Tax by Design is its system-wide perspective on different elements of the tax system. This review essay builds on this trait and offers a more explicit foundation for the report's general approach, drawing on a distribution-neutral methodology that is developed in other work. This technique is then employed to illuminate and extend Tax by Design's analysis regarding the VAT, environmental taxation, wealth transfer taxation and income transfers.