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Redistributive Taxation Under Ethical Behaviour

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  • Robin Boadway
  • Nicolas Marceau
  • Steeve Mongrain

Abstract

We consider the implications of ethical behaviour on the effect of a redistributive tax-transfer system. In choosing their labour supplies, individuals take into account whether their tax liabilities correspond to what they view as ethically acceptable. If tax liabilities are viewed as ethically acceptable, a taxpayer behaves ethically, does not distort her behaviour, and chooses to work as if she were not taxed. On the other hand, if ethical behaviour results in tax liabilities that exceed those that are ethically acceptable, she behaves egoistically (partially or fully), distorts her behaviour, and chooses her labour supply taking into account the income tax. We establish taxpayers' equilibrium behaviour and obtain that labour supply is less elastic when taxpayers may behave ethically than when they act egoistically. We characterize and compare the egoistic voting equilibrium linear tax schedules under potentially ethical and egoistic behaviour. We also compare our results to those obtained under altruism, an alternative benchmark.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0604.

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Date of creation: 2006
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Handle: RePEc:lvl:lacicr:0604

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Keywords: Ethical behaviour; Kantian preferences; income taxation; redistribution;

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Cited by:
  1. Arbex, Marcelo & Mattos, Enlinson & Ogura, Laudo M., 2014. "Taxing hard-to-tax markets," Textos para discussão 355, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  2. repec:gra:wpaper:13/06 is not listed on IDEAS
  3. Robin Boadway, 2012. "Recent Advances in Optimal Income Taxation," Hacienda Pública Española, IEF, vol. 200(1), pages 15-39, March.
  4. Nicolas-Guillaume Martineau, 2012. "The Influence of Special Interests and Party Activists on Electoral Competition," CESifo Working Paper Series 3811, CESifo Group Munich.
  5. Ángel Solano García, 2014. "Fairness in Tax compliance: A Political Competition Model," ThE Papers 14/02, Department of Economic Theory and Economic History of the University of Granada..
  6. Koenig, Tobias & Wagener, Andreas, 2013. "Tax structure and government expenditures with tax equity concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 137-153.

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