If demand for road space is inelastic, should "congestion pricing" be charged at maximum monopoly levels? Seems like a really bad idea -- especially if the money isn't used to lower other taxes. But how could the best price be determined?
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Replying to @The_Suburbanist
Optimal tax theory says taxing the most inelastic (least elastic) things is most efficient, in terms of distorting behaviour the least per £ raised. Sometimes this seems ‘unfair’ though
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Replying to @bswud @The_Suburbanist
these are both interesting topics, but they're radically different / non overlapping topics
@bswud is (correctly) solving the problem "how to maximize tax income while minimizing deadweight loss"@The_Suburbanist is discussing a political / philosophical question, I think1 reply 0 retweets 2 likes -
We could tax penises at $50,000 / year and raise a ton of money while altering the supply only a tiny tiny bit at the margin. Should we tax them at all? At what level? Economic theory has nothing to say about that.
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(I'll personally go off on a Stirnerite / Nozick / anarchist /deontological tangent and say "who is 'we' and where do 'we' get any authority to do such a thing?")
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