The value of studies for reducing uncertainty about the revenue maximizing tax rate is considered
from the viewpoint of a decision-maker who can set the rate. A simple approximation of the maximum
value of such studies for a decision - maker who thinks the existing rate is optimal is given by
(l/4)VAR(Θ)To where VAR(Θ) is the variance of the decision-makers prior distribution on the elasticity
of income with respect to the tax rate and T0 is current tax revenue.
(EN)
