Optimal Environmental Taxes Due to Health Effect
Haradhan Kumar Mohajan
Abstract
This paper shows that the optimal environmental tax
should be less than the marginal environmental damages;
since the presence of pre-existing distortionary taxes,
increasing the welfare costs is associated with the
overall tax code. The reduction of pollution causes the
benefits of health by supplying maximum labors to create
benefit-side tax interactions, which will tend to reduce
the optimal environmental taxes. The paper also shows
that the existence of social security system preserves
the gross wage of labors during sick days and grants
subsidies to medical treatments. An attempt is made to
confirm that health effects labor supply, which results
in an additional impact, the benefit-side
tax-interaction effect.
JEL. Classification: B22; E62; H21; H23; I11; K23
Keywords: Environmental Pollution, Optimal Environmental Taxes, Public Good, Budget Constraints
