Abstract :
This Handbook entry presents a conceptual, normative overview of the subject of
taxation. It emphasizes the relationships among the main functions of taxation – notably, raising
revenue, redistributing income, and correcting externalities – and the mapping between these
functions and various forms of taxation. Different types of taxation as well as expenditures on
transfers and public goods are each integrated into a common optimal tax framework with the
income tax and commodity taxes at the core. Additional topics addressed include a range of
dynamic issues, the unit of taxation, tax administration and enforcement, and tax equity.