Investigation of consumption tax in the household pattern مقاله

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7- Henry Thiel, "System Wide Approach to Micro Economics" The recent table, in addition to providing us with the calculation of optimal tax rates, also gives us the opportunity to observe the effects of taxation on goods within the consumption basket of households. As mentioned in previous discussions and according to Ramsey-Wattkinson's view: the optimal tax rate creates the best efficiency in the economy, which is related to the inverse of the elasticity of goods. In other words, such taxation can implement a better allocation of economic resources; accordingly, given the price elasticities of each group, the highest tax belongs to the fifth group, which is the tax on household appliances. However, this discussion was criticized, such that an economist named Ramsey showed that the tax rate on expenditure or consumption in different markets should not be equal; rather, a tax rate should be imposed based on the inverse of the elasticity of demand for each good, provided that we consider supply to be an elastic function. When we impose tax uniformly and with similar rates on the consumption of goods, no change is created in the ratio of prices; consequently, an improper effect on resource allocation is not observed. " In other words, if we denote the tax rate on a good as T and its elasticity of demand as E, then the condition for the optimal tax rate based on the Ramsey rule for two goods 1 and 2 will be as follows: (Refer to the page image) Now, with a general familiarity with the Ramsey rule, it can be described as a theoretical model.