Optimal taxation

Optimal taxation refers to designing a tax system that achieves government revenue goals while minimizing negative impacts on economic efficiency and individual behavior. The key idea is to balance the need for public funds with the aim of encouraging investment, work, and consumption. An optimal tax structure considers factors like fairness, simplicity, and economic growth. It seeks to tax individuals and businesses in a way that raises necessary funds without discouraging productivity or creating excessive hardship, ultimately aiming for a fair distribution of the tax burden while supporting the overall economy.