Optimal Utilitarian Taxation and Horizontal Equity
Abstract
We impose a horizontal equity restriction on the problem of finding the optimal utilitarian tax mix. The horizontal equity constraint requires that individuals with the same ability have to pay the same amount of taxes regardless of their preferences for leisure. Contrary to normal findings, we find that a good that is complementary to leisure can be encouraged by the tax system and that a good that normally should be discouraged by the tax system can be subsidized even if the economy is composed of only two private commodities plus leisure. Also, the marginal effective tax rate can be different from zero at the top of the ability distribution when the tax mix obeys the horizontal equity constraint. Copyright 2005 Blackwell Publishing Inc..Download Info
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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 7 (2005)
Issue (Month): 4 (October)
Pages: 681-708
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Keywords:Other versions of this item:
- Jordahl, Henrik & Micheletto, Luca, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Working Paper Series 2002:19, Uppsala University, Department of Economics.
- Jordahl, Henrik & Luca Micheletto, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Royal Economic Society Annual Conference 2002 107, Royal Economic Society.
- Henrik Jordahl & Luca Micheletto, 2003. "Optimal Utilitarian Taxation and Horizontal Equity," CESifo Working Paper Series 977, CESifo Group Munich.
- Jordahl, Henrik & Micheletto, Luca, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Ratio Working Papers 17, The Ratio Institute.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Henrik Jordahl & Luca Micheletto, 2005.
"Optimal Utilitarian Taxation and Horizontal Equity,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 7(4), pages 681-708, October.
- Jordahl, Henrik & Micheletto, Luca, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Working Paper Series 2002:19, Uppsala University, Department of Economics.
- Jordahl, Henrik & Luca Micheletto, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Royal Economic Society Annual Conference 2002 107, Royal Economic Society.
- Henrik Jordahl & Luca Micheletto, 2003. "Optimal Utilitarian Taxation and Horizontal Equity," CESifo Working Paper Series 977, CESifo Group Munich.
- Jordahl, Henrik & Micheletto, Luca, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Ratio Working Papers 17, The Ratio Institute.
- Alessandro Balestrino, 2012. "Family Taxation, Fertility, and Horizontal Equity: A Political Economy Perspective," CESifo Working Paper Series 3774, CESifo Group Munich.
- Jukka Pirttilä & Sanna Tenhunen, 2005.
"Pawns and Queens Revisited: Public Provision of Private Goods when Individuals make Mistakes,"
CESifo Working Paper Series
1466, CESifo Group Munich.
- Jukka Pirttilä & Sanna Tenhunen, 2008. "Pawns and queens revisited: public provision of private goods when individuals make mistakes," International Tax and Public Finance, Springer, vol. 15(5), pages 599-619, October.
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"Public Provision of Private Goods, Tagging and Optimal Income Taxation withHeterogeneity in Needs,"
CESifo Working Paper Series
3275, CESifo Group Munich.
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