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Should Egalitarians Expropriate Philanthropists?

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  • Indraneel Dasgupta,
  • Ravi Kanbur

Abstract

Wealthy individuals often voluntarily provide public goods that the poor also consume. Such philanthropy is perceived as legitimizing one’s wealth. Governments routinely exempt the rich from taxation on grounds of their charitable expenditure. We examine the normative logic of this exemption. We show that, rather than reducing it, philanthropy may aggravate absolute inequality in welfare achievement, while leaving the change in relative inequality ambiguous. Additionally, philanthropic preferences may increase the effectiveness of policies to redistribute income, instead of weakening them. Consequently, the general normative case for exempting the wealthy from expropriation, on grounds of their public goods contributions, appears dubious.

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Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 07/13.

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Handle: RePEc:not:notcre:07/13

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Keywords: Community; Public goods; Inequality; Distribution; Philanthropy; Egalitarianism;

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  1. Cornes, Richard, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(1), pages 259-71, February.
  2. Itaya, Jun-ichi & de Meza, David & Myles, Gareth D., 1997. "In praise of inequality: public good provision and income distribution," Economics Letters, Elsevier, Elsevier, vol. 57(3), pages 289-296, December.
  3. Bossert, Walter & Pfingsten, Andreas, 1990. "Intermediate inequality: concepts, indices, and welfare implications," Mathematical Social Sciences, Elsevier, Elsevier, vol. 19(2), pages 117-134, April.
  4. Indraneel Dasgupta & Ravi Kanbur, 2005. "Community and anti-poverty targeting," Journal of Economic Inequality, Springer, Springer, vol. 3(3), pages 281-302, December.
  5. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, Elsevier, vol. 13(1), pages 82-111, August.
  6. Richard Cornes & Todd Sandler, 1998. "Pareto-Improving Redistribution and Pure Public Goods," Keele Department of Economics Discussion Papers (1995-2001), Department of Economics, Keele University 98/04, Department of Economics, Keele University.
  7. Robert Breunig & Indraneel Dasgupta, 2005. "Do Intra-Household Effects Generate the Food Stamp Cash-Out Puzzle?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 87(3), pages 552-568.
  8. Buhong Zheng, 2007. "Unit-Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 74(293), pages 97-111, 02.
  9. Dasgupta, Indraneel & Kanbur, Ravi, 2007. "Community and Class Antagonism," Working Papers, Cornell University, Department of Applied Economics and Management 127009, Cornell University, Department of Applied Economics and Management.
  10. Cornes, Richard & Sandler, Todd, 1994. "The comparative static properties of the impure public good model," Journal of Public Economics, Elsevier, Elsevier, vol. 54(3), pages 403-421, July.
  11. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer, Springer, vol. 11(2), pages 83-97, June.
  12. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, Elsevier, vol. 12(3), pages 416-442, June.
  13. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Bridging Communal Divides: Separation, Patronage, Integration," Working Papers, Cornell University, Department of Applied Economics and Management 127235, Cornell University, Department of Applied Economics and Management.
  14. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198292975, October.
  15. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 29(1), pages 25-49, February.
  16. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 100(401), pages 464-77, June.
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Citations

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Cited by:
  1. Dasgupta, Indraneel & Kanbur, Ravi, 2007. "Community and Class Antagonism," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6330, C.E.P.R. Discussion Papers.
  2. Atkinson, A.B., 2009. "Giving overseas and public policy," Journal of Public Economics, Elsevier, Elsevier, vol. 93(5-6), pages 647-653, June.
  3. Dasgupta Indraneel, 2011. "Mother or Child? Intra-household Redistribution under Gender-Asymmetric Altruism," Journal of Globalization and Development, De Gruyter, De Gruyter, vol. 2(1), pages 1-27, August.
  4. Indraneel Dasgupta, . "Women or Children? Intra-household redistribution under gender-asymmetric altruism," Discussion Papers, University of Nottingham, CREDIT 07/10, University of Nottingham, CREDIT.

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