Why Are Taxes So High in Egalitarian Societies?

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Why Are Taxes So High in Egalitarian Societies?

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Persson, Mats

Abstract

In an analysis of the relative income, or relative consumption, hypothesis, it is shown that if the ratio of agent i's consumption to agent j's consumption enters into the utility function, a tax on labor income may increase welfare for all agents. If pretax wage inequality is low, all agents will unanimously be in favor of such a tax. Thus there will be a tendency for taxes to be high in societies where pretax wage inequality is low. Copyright 1995 by The editors of the Scandinavian Journal of Economics.

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Article provided by Blackwell Publishing in its journal Scandinavian Journal of Economics.

Volume (Year): 97 (1995)
Issue (Month): 4 (December)
Pages: 569-80
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Handle: RePEc:bla:scandj:v:97:y:1995:i:4:p:569-80

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Fisher, Walter H. & Hof, Franz X., 2005. "The Quest for Status and Endogenous Labor Supply. The Relative Wealth Framework," Economics Series 181, Institute for Advanced Studies. [Downloadable!]
Other versions:
- Walter H. Fisher & IHS-Vienna & Franz X. Hof, 2006. "The Quest for Status and Endogenous Labor Supply: The Relative Wealth Framework," Computing in Economics and Finance 2006 60, Society for Computational Economics. [Downloadable!]
- Walter Fisher & F. Hof, 2008. "The quest for status and endogenous labor supply: the relative wealth framework," Journal of Economics, Springer, vol. 93(2), pages 109-144, March. [Downloadable!] (restricted)
Michael Keen, 1997. "Peculiar institutions: A British perspective on tax policy in the United States," Fiscal Studies, Institute for Fiscal Studies, vol. 18(4), pages 371-400, November. [Downloadable!]
Akay, Alpaslan & Martinsson, Peter & Medhin, Haileselassie, 2009. "Does Positional Concern Matter in Poor Societies? Evidence from a Survey Experiment in Rural Ethiopia," IZA Discussion Papers 4354, Institute for the Study of Labor (IZA). [Downloadable!]
Widmalm, Frida, 1998. "Marriage, Housework and Fairness," Working Paper Series 1998:22, Uppsala University, Department of Economics. [Downloadable!]
Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2001. "How Much Do We Care About Absolute Versus Relative Income and Consumption?," Working Papers in Economics 63, Göteborg University, Department of Economics. [Downloadable!]
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- Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2005. "How much do we care about absolute versus relative income and consumption?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 405-421, March. [Downloadable!] (restricted)
Lars Ljungqvist & Harald Uhlig, 2000. "Tax Policy and Aggregate Demand Management under Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 90(3), pages 356-366, June. [Downloadable!] (restricted)
Wildasin, David E., 1999. "Factor mobility and fiscal policy in the EU : policy issues and analytical approaches," ZEW Discussion Papers 99-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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- David E. Wildasin, 2000. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," Economic Policy, CEPR, CES, MSH, vol. 15(31), pages 337-378, October. [Downloadable!] (restricted)
Fisher, Walter H. & Hof, Franz X., 2001. "Status Seeking in the Small Open Economy," Economics Series 106, Institute for Advanced Studies. [Downloadable!]
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- Fisher, Walter H. & Hof, Franz X., 2005. "Status seeking in the small open economy," Journal of Macroeconomics, Elsevier, vol. 27(2), pages 209-232, June. [Downloadable!] (restricted)
Giacomo Corneo, 2000. "The Efficient Side of Progressive Income Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Carlsson, Fredrik & Nam, Pham Khanh & Linde-Rahr, Martin & Martinsson, Peter, 2005. "Are Vietnamese Farmers Concerned with their Relative Position in Society?," Working Papers in Economics 165, Göteborg University, Department of Economics. [Downloadable!]
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Ljungqvist, Lars & Uhlig, Harald, 1998. "Catching up with the Keynesians," Working Paper Series in Economics and Finance 259, Stockholm School of Economics. [Downloadable!]
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- Ljungqvist, L. & Uhlig, H., 1996. "Catching up with the Keynesians," Discussion Paper 96, Tilburg University, Center for Economic Research. [Downloadable!]
Michele Giuseppe Giuranno, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 603, University of Essex, Department of Economics. [Downloadable!]
Giuranno, Michele, 2008. "Regional income disparity and the size of the Public Sector," P.O.L.I.S. department's Working Papers 114, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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- Michele Giuseppe Giuranno, 2009. "Regional Income Disparity and the Size of the Public Sector," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 697-719, October. [Downloadable!] (restricted)
Agell, Jonas & Persson, Mats, 1998. "Tax Arbitrage and Labor Supply," Seminar Papers 647, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Jonas Agell & Mats Persson, 1998. "Tax Arbitrage and Labor Supply," NBER Working Papers 6708, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Micheletto, Luca, 2009. "Optimal nonlinear redistributive taxation and public good provision in an economy with Veblen effects," Working Paper Series 2009:3, Uppsala University, Department of Economics. [Downloadable!]
Fisher, Walter H. & Hof, Franz X., 2000. "Relative Consumption and Endogenous Labour Supply in the Ramsey Model: Do Status-Conscious People Work Too Much?," Economics Series 85, Institute for Advanced Studies. [Downloadable!]

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