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Progressive and merging-proof taxation

Author

Listed:
  • Biung-Ghi Ju

    (Department of Economics, Korea University)

  • Juan D. Moreno-Ternero

    (Department of Economic Theory, Universidad de Málaga)

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.

Suggested Citation

  • Biung-Ghi Ju & Juan D. Moreno-Ternero, 2009. "Progressive and merging-proof taxation," Working Papers 2009-7, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    • Handle: RePEc:mal:wpaper:2009-7
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    References listed on IDEAS

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    2. Biung-Ghi Ju & Juan Moreno-Ternero, 2008. "On the equivalence between progressive taxation and inequality reduction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(4), pages 561-569, May.
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    Cited by:

    1. Calleja, Pedro & Llerena, Francesc, 2022. "Non-manipulability by clones in bankruptcy problems," Economics Letters, Elsevier, vol. 221(C).
    2. Jens Hougaard & Juan Moreno-Ternero & Lars Østerdal, 2013. "Rationing in the presence of baselines," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(4), pages 1047-1066, April.
    3. Valencia-Toledo, Alfredo & Vidal-Puga, Juan, 2015. "Non-manipulable rules for land rental problems," MPRA Paper 67334, University Library of Munich, Germany.
    4. Chambers, Christopher P. & Moreno-Ternero, Juan D., 2021. "Bilateral redistribution," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    5. Doudou Gong & Genjiu Xu & Xuanzhu Jin & Loyimee Gogoi, 2022. "A sequential partition method for non-cooperative games of bankruptcy problems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 30(2), pages 359-379, July.
    6. Thomson, William, 2015. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: An update," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 41-59.
    7. Ricardo Martínez & Juan D. Moreno‐Ternero, 2024. "Redistribution with needs," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    8. Alfredo Valencia-Toledo & Juan Vidal-Puga, 2020. "Reassignment-proof rules for land rental problems," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(1), pages 173-193, March.
    9. Martínez, Ricardo & Moreno-Ternero, Juan D., 2022. "Laissez-faire or full redistribution?," Economics Letters, Elsevier, vol. 218(C).
    10. 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.
    11. Miguel Ángel Mirás Calvo & Iago Núñez Lugilde & Carmen Quinteiro Sandomingo & Estela Sánchez Rodríguez, 2023. "Refining the Lorenz‐ranking of rules for claims problems on restricted domains," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 526-558, September.
    12. Liu, Siwen & Borm, Peter & Norde, Henk, 2023. "Induced Rules for Minimum Cost Spanning Tree Problems : towards Merge-proofness and Coalitional Stability," Discussion Paper 2023-021, Tilburg University, Center for Economic Research.
    13. Sudhölter, Peter & Calleja, Pedro & Llerena, Francesc, 2023. "A note on solidarity in bankruptcy problems when agents merge or split," Discussion Papers on Economics 1/2023, University of Southern Denmark, Department of Economics.
    14. William Thomson, 2014. "New variable-population paradoxes for resource allocation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 255-277, February.
    15. Liu, Siwen & Borm, Peter & Norde, Henk, 2023. "Induced Rules for Minimum Cost Spanning Tree Problems : towards Merge-proofness and Coalitional Stability," Other publications TiSEM bf366633-5301-4aad-81c8-a, Tilburg University, School of Economics and Management.
    16. Słomczyński, Wojciech & Życzkowski, Karol, 2012. "Mathematical aspects of degressive proportionality," Mathematical Social Sciences, Elsevier, vol. 63(2), pages 94-101.
    17. Satya R. Chakravarty & Palash Sarkar, 2022. "Inequality minimising subsidy and taxation," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(1), pages 53-67, May.
    18. Calleja, Pedro & Llerena, Francesc & Sudhölter, Peter, 2023. "Remarks on solidarity in bankruptcy problems when agents merge or split," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 61-64.

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    More about this item

    Keywords

    taxation; progressivity; merging-proofness; consistency; operators;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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