Governments Can Optimize Taxes and Public Services for Societal Benefit
This article explores how to best tax incomes, provide public goods, and set prices in a big economy. The researchers tackle the challenge of dealing with different information about people's work productivity and preferences for public goods. They suggest a way to figure out the best mix of taxing incomes, offering public goods, and setting prices that won't be easily changed later. By assuming connections within the information available, they find that the ideal ways to tax income, provide public goods, and set prices are similar to simpler models. The findings apply to cases where the goal is to maximize overall well-being and when certain constraints need to be considered during the planning phase.