I am conducting a study on optimal tax systems and I'm willing to apply a simulation analysis on existing systems to see the differences and to move towards a system of taxation that best meets governments' interests!
If I understand correctly your problem, you want to identify an optimal tax system, i.e. solve an optimal taxation problem, by simulation (rather than analytically. Have a look at these papers:
Aaberge, R. and U. Colombino (2013) Designing Optimal Taxes with a Microeconometric Model of Labour Supply, Scandinavian Journal of Economics, 115 (2), 449–475.
Aaberge, R. and U. Colombino (2012) Accounting for Family Background when Designing Optimal Income Taxes: A Microeconometric Simulation Analysis, Journal of Population Economics, 25(2), 741-761.
Blundell, R. and A. Shephard (2012) Employment, Hours of Work and the Optimal Taxation of Low-Income Families, Review of Economic Studies, 79(2), 481-510.
Colombino, U. (2011) Five issues in the design of income support mechanisms. The case of Italy, IZA Discussion Paper No. 6059.
Thank you very much for the reply, your contribution has been very helpful. Your papers open new dimensions on my research design. I hope to get more insight and tips as I find you an expert of the field I intend to specialize.
If you want to start from the very initial point and/or develop your own model of optimal taxation you might start from these basic works. Say, the Dalton’s principle of maximum social advantage could be helpful to model an optimal tax(es) burden(s) in a particular community.
Wicksell, K. (1896) ‘Ein neues prinzip der gerechten besteuerung’. In Wicksell, K. (ed.) Finanztheoretische Untersuchungen nebst Darstellung und Kritik des Steuerwesens Schwedens (London: MacMillan), pp. 72–118.
Lindahl, E. (1919) ‘Die Gerechtigkeit der Besteuerung. Eine Analyse der Steuerprinzipien auf Grundlage der Grenznutzentheorie.’ In Musgrave, R. A. and Peacock, A. T. (eds) Classics in the Theory of Public Finance (London: MacMillian), pp. 68–176.
Dalton, H. (1923) Principles of Public Finance (New York: A.A. Knopf).
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