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The politics of progressive income taxation with incentive effects

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  • De Donder, Philippe
  • Hindriks, Jean

Abstract

This paper studies majority voting over non-linear income taxes when individuals respnd to taxation by substituting untaxable leisure to taxable labor. We first show that voting cycles over progressive and regressive taxes is inevitable. We then investigate three solution to this cycling problem: (i)rducing the policy space to the policies that are ideal for some voter; (ii) weakening the voting equilibrium concept; (iii) assuming parties also care about the size of their majority.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 87 (2003)
Issue (Month): 11 (October)
Pages: 2491-2505

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Handle: RePEc:eee:pubeco:v:87:y:2003:i:11:p:2491-2505

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Web page: http://www.elsevier.com/locate/inca/505578

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References

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  1. John E. Roemer, 1999. "The Democratic Political Economy of Progressive Income Taxation," Econometrica, Econometric Society, Econometric Society, vol. 67(1), pages 1-20, January.
  2. Kramer, Gerald H. & Snyder, James M., 1983. "Fairness, Self-Interest, and the Politics of the Progressive Income Tax," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 498, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. De Donder, Philippe & Le Breton, Michel & Truchon, Michel, 2000. "Choosing from a weighted tournament1," Mathematical Social Sciences, Elsevier, Elsevier, vol. 40(1), pages 85-109, July.
  4. Gerald Kramer, 1983. "Is there a demand for progressivity?," Public Choice, Springer, Springer, vol. 41(1), pages 223-228, January.
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  17. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 13(1), pages 1-10, April.
  18. De Donder, Philippe & Hindriks, Jean, 1998. " The Political Economy of Targeting," Public Choice, Springer, Springer, vol. 95(1-2), pages 177-200, April.
  19. Jean-FranÚois Laslier, 2000. "Interpretation of electoral mixed strategies," Social Choice and Welfare, Springer, Springer, vol. 17(2), pages 283-292.
  20. De Donder, Philippe & Le Breton, Michel & Truchon, Michel, 1998. "Choosing from a Weighted Tournament," Cahiers de recherche, Université Laval - Département d'économique 9815, Université Laval - Département d'économique.
  21. David Epstein, 1997. "Uncovering some subtleties of the uncovered set: Social choice theory and distributive politics," Social Choice and Welfare, Springer, Springer, vol. 15(1), pages 81-93.
  22. Laffond G. & Laslier J. F. & Le Breton M., 1993. "The Bipartisan Set of a Tournament Game," Games and Economic Behavior, Elsevier, vol. 5(1), pages 182-201, January.
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Citations

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Cited by:
  1. Casamatta, Georges & Cremer, Helmuth & De Donder, Philippe, 2008. "Repeated electoral competition over non-linear income tax schedules," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7054, C.E.P.R. Discussion Papers.
  2. Felix Bierbrauer & Pierre C. Boyer, 2014. "Efficiency, Welfare, and Political Competition," CESifo Working Paper Series 4814, CESifo Group Munich.
  3. Rafael Salas & Juan Rodríguez, 2013. "Popular support for social evaluation functions," Social Choice and Welfare, Springer, Springer, vol. 40(4), pages 985-1014, April.
  4. Soumyanetra Munshi, 2011. "On existence of pure strategy equilibrium with endogenous income," Social Choice and Welfare, Springer, Springer, vol. 37(1), pages 1-37, June.
  5. Jean Hindriks, 2000. "Is There a Demand for Income Tax Progressivity?," Working Papers, Queen Mary, University of London, School of Economics and Finance 415, Queen Mary, University of London, School of Economics and Finance.
  6. Klor, Esteban F., 2006. "A positive model of overlapping income taxation in a federation of states," Journal of Public Economics, Elsevier, Elsevier, vol. 90(4-5), pages 703-723, May.
  7. Philippe De Donder & Jean Hindriks, 2004. "Majority Support for Progressive Income Taxation with Corner Preferences," Public Choice, Springer, Springer, vol. 118(3_4), pages 437-449, 03.
  8. Bierbrauer, F.J. & Boyer, F.J., 2011. "Political competition and Mirrleesian income taxation: A first pass," Cambridge Working Papers in Economics 1108, Faculty of Economics, University of Cambridge.
  9. Carbonell-Nicolau Oriol, 2009. "A Positive Theory of Income Taxation," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 9(1), pages 1-49, July.
  10. John Roemer, 2012. "The political economy of income taxation under asymmetric information: the two-type case," SERIEs, Spanish Economic Association, vol. 3(1), pages 181-199, March.
  11. Jenny De Freitas, 2009. "A Probabilistic Voting Model of Progressive Taxation with Incentive Effects," DEA Working Papers, Universitat de les Illes Balears, Departament d'Economía Aplicada 34, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  12. Rafael Salas & Juan Gabriel Rodríguez, 2010. "Popular support for egalitarian social welfare," Working Papers 171, ECINEQ, Society for the Study of Economic Inequality.

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