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Voting over piece-wise linear tax methods

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  • Juan D. Moreno-Ternero

    ()
    (Department of Economic Theory, Universidad de Málaga)

Abstract

We analyze the problem of choosing the most appropriate method for apportioning taxes in a democracy. We consider a simple model of taxation and restrict our attention to piece- wise linear tax methods, which are almost ubiquitous in advanced democracies worldwide. In spite of facing an impossibility result saying that if we allow agents to vote for any piece-wise linear tax method no equilibrium exists, we show that if we limit the domain of admissible methods in a meaningful way, albeit not restrictive, an equilibrium does exist. We also show that, for such a domain, a wide variety of methods can be supported in equilibrium. This last result provides rationale for some activities of special interest groups.

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File URL: http://webdeptos.uma.es/THEconomica/malagawpseries/Papers/METCwp2010-1.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center in its series Working Papers with number 2010-01.

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Length: 21 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:mal:wpaper:2010-1

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Keywords: voting; taxes; majority; single crossing; special interest politics;

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Cited by:
  1. Słomczyński, Wojciech & Życzkowski, Karol, 2012. "Mathematical aspects of degressive proportionality," Mathematical Social Sciences, Elsevier, vol. 63(2), pages 94-101.

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