Title: Essays in optimal taxation
Description: This thesis consists of four essays that span a wide range of topics in, and perspectives on, the dominant modern framework for optimal taxation research. The first analyzes a potential tax reform based on this framework: age-dependent taxation. Using modern dynamic optimal tax methods, I provide a comprehensive theoretical and quantitative examination of age dependence and compare it to two alternative policies: an age-independent policy and a dynamic optimal policy. Despite its simplicity, age dependence yields a large welfare gain equal to between one and three percent of aggregate annual consumption, and it captures a substantial portion of the gain from reform to the dynamic optimal policy. The second incorporates a factor into this framework that is generally neglected: preference heterogeneity. I avoid technical difficulties that arise with preference heterogeneity in general by focusing on a specific but important class of preferences: those against which individuals do not want to be insured. Prominent critics of redistributive taxation have long stressed the normative importance of this class, and I examine its effects on the optimal design of taxation. In addition, I present cross-country evidence that is consistent with a key prediction of the model, suggesting preference heterogeneity's importance in a positive analysis of taxation. The third applies this framework to a new issue: the optimal policy response to heterogeneity in parents' altruism toward their children. I derive a normative criterion for optimality by modifying the standard framework to apply to an economy with parents and children. I argue that the social welfare function in this setting fully offsets the effects of heterogeneity in parental altruism on children, contrary to the conventional economic approach to optimal intergenerational policy.

The fourth challenges this framework by pointing out that its theory, combined with empirical evidence, recommends a tax credit for short taxpayers and a tax surcharge for tall ones. With my coauthor, N. Gregory Mankiw, I show that the optimal height tax in the United States is substantial. We argue that if society rejects this policy, we must revisit the standard framework for optimal taxation that recommended it.