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Progressive and merging-proof taxation

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  • Biung-Ghi Ju

    ()

  • Juan Moreno-Ternero

    ()

Abstract

We investigate the implications and logical relations between progressivity (a principle of distributive justice) and merging-proofness (a strategic principle) in taxation. By means of two characterization results, we show that these two principles are intimately related, despite their different nature. In particular, we show that, in the presence of continuity and consistency (a widely accepted framework for taxation) progressivity implies merging-proofness and that the converse implication holds if we add an additional strategic principle extending the scope of merging-proofness to a multilateral setting. By considering operators on the space of taxation rules, we also show that progressivity is slightly more robust than merging-proofness.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 40 (2011)
Issue (Month): 1 (February)
Pages: 43-62

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Handle: RePEc:spr:jogath:v:40:y:2011:i:1:p:43-62

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Related research

Keywords: Taxation; Progressivity; Merging-proofness; Consistency; Operators; C70; D63; D70; H20;

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References

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  1. Biung-Ghi Ju & Juan D. Moreno-Ternero, 2007. "On the equivalence between progressive taxation and inequality reduction," Discussion Paper Series 0718, Institute of Economic Research, Korea University.
  2. Toru Hokari & William Thomson, 2007. "On properties of division rules lifted by bilateral consistency," RCER Working Papers 536, University of Rochester - Center for Economic Research (RCER).
  3. Juan Moreno-Ternero, 2006. "Composition, Securement, and Concede-and-divide," Spanish Economic Review, Springer, vol. 8(3), pages 227-237, September.
  4. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, 09.
  5. William Thomson & Chun-Hsien Yeh, 2006. "Operators for the adjudication of conflicting claims," RCER Working Papers 531, University of Rochester - Center for Economic Research (RCER).
  6. Marc Fleurbaey & Francois Maniquet, 2002. "Fair Income Tax," Economics Working Papers 0021, Institute for Advanced Study, School of Social Science.
  7. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  8. Marc Fleurbaey & Fran�Ois Maniquet, 2006. "Fair Income Tax," Review of Economic Studies, Wiley Blackwell, vol. 73(1), pages 55-83, 01.
  9. Chambers, Christopher P. & Thomson, William, 2002. "Group order preservation and the proportional rule for the adjudication of conflicting claims," Mathematical Social Sciences, Elsevier, vol. 44(3), pages 235-252, December.
  10. Moulin, Hervé, 2008. "Proportional scheduling, split-proofness, and merge-proofness," Games and Economic Behavior, Elsevier, vol. 63(2), pages 567-587, July.
  11. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
  12. Frutos, María Ángeles de, . "Coalitional manipulations in a bankruptcy problem," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4282, Universidad Carlos III de Madrid.
  13. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
  14. Biung-Ghi Ju, 2003. "Manipulation via merging and splitting in claims problems," Review of Economic Design, Springer, vol. 8(2), pages 205-215, October.
  15. Ju, Biung-Ghi & Miyagawa, Eiichi & Sakai, Toyotaka, 2007. "Non-manipulable division rules in claim problems and generalizations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 1-26, January.
  16. Juan Moreno-Ternero & Antonio Villar, 2006. "New characterizations of a classical bankruptcy rule," Review of Economic Design, Springer, vol. 10(2), pages 73-84, August.
  17. M. Angeles de Frutos, 1999. "Coalitional manipulations in a bankruptcy problem," Review of Economic Design, Springer, vol. 4(3), pages 255-272.
  18. Herrero, Carmen & Villar, Antonio, 2001. "The three musketeers: four classical solutions to bankruptcy problems," Mathematical Social Sciences, Elsevier, vol. 42(3), pages 307-328, November.
  19. Fellman, J, 1976. "The Effect of Transformations on Lorenz Curves," Econometrica, Econometric Society, vol. 44(4), pages 823-24, July.
  20. Juan D. Moreno-Ternero, 2007. "Bankruptcy Rules And Coalitional Manipulation," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 105-118.
  21. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
  22. Eichhorn, Wolfgang & Funke, Helmut & Richter, Wolfram F., 1984. "Tax progression and inequality of income distribution," Journal of Mathematical Economics, Elsevier, vol. 13(2), pages 127-131, October.
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Citations

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Cited by:
  1. Kasajima, Yoichi & Velez, Rodrigo A., 2010. "Non-proportional inequality preservation in gains and losses," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1079-1092, November.
  2. Jens Leth Hougaard & Juan D. Moreno-Ternero & Lars Peter Østerdal, 2010. "Baseline Rationing," Discussion Papers 10-16, University of Copenhagen. Department of Economics.

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