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The Equal Sacrifice Principle Revisited

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  • Peter J. Lambert

    ()
    (Department of Economics, University of Oregon)

  • Helen T. Naughton

    (Department of Economics, University of Oregon)

Abstract

What does an equal sacrifice tax look like in the case of a rank-dependent social welfare function? One's tax liability evidently becomes a function of one's income and one's position in the distribution in such a case, but not much else appears to be known. (Menahem Yaari touched upon the issue in his paper "A controversial proposal concerning inequality measurement", Journal of Economic Theory 1988, but focused only on a poll tax). In this paper, we determine the properties of the equal sacrifice tax for a wide class of rank-dependent social welfare functions, and integrate the theory with that already available for the class of utilitarian social welfare functions. In an additional step, we analyze the equal sacrifice tax for a class of mixed utilitarian and rank-dependent social welfare functions, and finally we review what this synthesis has achieved.

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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 45.

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Length: 23 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2006-45

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Keywords: equal sacrifice; income tax; equity.;

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  1. DONALDSON, David & WEYMARK, John A., . "Ethically flexible Gini indices for income distributions in the continuum," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -520, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, Elsevier, vol. 1(4), pages 409-430, August.
  3. Young, H. P., 1987. "Progressive taxation and the equal sacrifice principle," Journal of Public Economics, Elsevier, Elsevier, vol. 32(2), pages 203-214, March.
  4. Mitra, T. & Ok, E.A., 1994. "Personal Income Taxation and the Principle of Equal Sacrifice Revisited," Papers, Cornell - Department of Economics 94-29, Cornell - Department of Economics.
  5. Harrison, Alan, 1981. "Earnings by Size: A Tale of Two Distributions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 48(4), pages 621-31, October.
  6. Mitra, Tapan & Ok, Efe A., 1997. "On the Equitability of Progressive Taxation," Journal of Economic Theory, Elsevier, Elsevier, vol. 73(2), pages 316-334, April.
  7. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, Econometric Society, vol. 44(4), pages 805-09, July.
  8. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, number smith1776.
  9. Young, H Peyton, 1990. "Progressive Taxation and Equal Sacrifice," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 253-66, March.
  10. Berliant, Marcus & Gouveia, Miguel, 1993. "Equal sacrifice and incentive compatible income taxation," Journal of Public Economics, Elsevier, Elsevier, vol. 51(2), pages 219-240, June.
  11. Ok, Efe A., 1995. "On the principle of equal sacrifice in income taxation," Journal of Public Economics, Elsevier, Elsevier, vol. 58(3), pages 453-467, November.
  12. Hutton, J P & Lambert, P J, 1980. "Evaluating Income Tax Revenue Elasticities," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 90(363), pages 901-06, December.
  13. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  14. Berrebi, Z. M. & Silber, Jacques, 1981. "Weighting income ranks and levels : A Multiple-Parameter Generalization For Absolute and Relative Inequality Indices," Economics Letters, Elsevier, Elsevier, vol. 7(4), pages 391-397.
  15. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 111-140, January.
  16. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 22(1), pages 67-86, February.
  17. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, Elsevier, vol. 44(2), pages 381-397, April.
  18. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, Elsevier, vol. 44(2), pages 321-335, April.
  19. D'Antoni, Massimo, 1999. "Piecewise linear tax functions, progressivity, and the principle of equal sacrifice," Economics Letters, Elsevier, Elsevier, vol. 65(2), pages 191-197, November.
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Cited by:
  1. Peter J. Lambert, 2007. "Positional equity and equal sacrifice: design principles for an EU-wide income tax?," Working Papers, University of Otago, Department of Economics 0706, University of Otago, Department of Economics, revised Apr 2007.

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