The application of welfare economics to taxation

Abstract

Theoretical approaches with different points of departure often concentrate on the very same subject, however, there are only few analyses in scientific literature that offer a comparison of studies with different approaches. I try to apply this conception in my paper. Within that, I dwell on questions that are “simple” to present with the theoretical approach of welfare economics, but their practical application raises doubts in many. I give a few examples to illustrate how theoretical models can be transformed into models suitable for concrete analyses. Then I sum up the most important elements of the views criticising the “traditional” theory of the welfare effects of taxation, and provide a summary of those critiques by pointing out the contradictions of theoretical models and practical applicability.