Budget share and optimal commodity taxes without computation

Yves Balcer*, Efraim Sadka

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper shows for the linear expenditure system that the optimal tax rates increase across commodities in the ratio of the respective budget shares of the rich to those of the poor-i.e., the more luxurious good has a higher tax. These budget shares can be calculated either at pre-tax or post-tax price levels, thus can be expressed directly in terms of the basic parameters of the linear expenditure system.

Original languageEnglish
Pages (from-to)265-271
Number of pages7
JournalEconomics Letters
Issue number3
StatePublished - 1981


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