TY  - JOUR
AU  - Mankiw,N. Gregory
AU  - Weinzierl,Matthew
AU  - Yagan,Danny
TI  - Optimal Taxation in Theory and Practice
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15071
PY  - 2009
Y2  - June 2009
UR  - http://www.nber.org/papers/w15071
L1  - http://www.nber.org/papers/w15071.pdf
N1  - Author contact info:
N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu

Matthew C. Weinzierl
Harvard Business School
277 Morgan
Soldiers Field
Boston, MA 02163
Tel: 617/495-6697
Fax: 617/496-5994
E-Mail: mweinzierl@hbs.edu

Danny Yagan
Department of Economics
Littauer 200, North Yard
Harvard University
Cambridge, MA  02138
E-Mail: yagan@fas.harvard.edu
AB  - We highlight and explain eight lessons from optimal tax theory and compare them to the last few decades of OECD tax policy. As recommended by theory, top marginal income tax rates have declined, marginal income tax schedules have flattened, redistribution has risen with income inequality, and commodity taxes are more uniform and are typically assessed on final goods. However, trends in capital taxation are mixed, and capital income tax rates remain well above the zero level recommended by theory. Moreover, some of theory's more subtle prescriptions, such as taxes that involve personal characteristics, asset-testing, and history-dependence, remain rare in practice. Where large gaps between theory and policy remain, the difficult question is whether policymakers need to learn more from theorists, or the other way around.
ER  -