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The Equal Sacrifice Principle Revisited

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  • Peter J. Lambert

    ()
    (University of Oregon Economics Department)

  • Helen T. Naughton

    (University of Oregon Economics (Student))

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 University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2006-4.

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Length: 21
Date of creation: 01 Jun 2006
Date of revision: 01 Jun 2006
Handle: RePEc:ore:uoecwp:2006-4

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Keywords: equal sacrifice; income tax; inequality;

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References

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  1. Young, H. P., 1987. "Progressive taxation and the equal sacrifice principle," Journal of Public Economics, Elsevier, vol. 32(2), pages 203-214, March.
  2. Berrebi, Z. M. & Silber, Jacques, 1981. "Weighting income ranks and levels : A Multiple-Parameter Generalization For Absolute and Relative Inequality Indices," Economics Letters, Elsevier, vol. 7(4), pages 391-397.
  3. WEYMARK, John A., . "Generalized Gini inequality indices," CORE Discussion Papers RP -453, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Berliant, Marcus & Gouveia, Miguel, 1993. "Equal sacrifice and incentive compatible income taxation," Journal of Public Economics, Elsevier, vol. 51(2), pages 219-240, June.
  5. Mitra, Tapan & Ok, Efe A, 1996. "Personal Income Taxation and the Principle of Equal Sacrifice Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 925-48, November.
  6. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
  7. 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, number smith1776.
  8. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April.
  9. Mitra, Tapan & Ok, Efe A., 1997. "On the Equitability of Progressive Taxation," Journal of Economic Theory, Elsevier, vol. 73(2), pages 316-334, April.
  10. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  11. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  12. Young, H Peyton, 1990. "Progressive Taxation and Equal Sacrifice," American Economic Review, American Economic Association, vol. 80(1), pages 253-66, March.
  13. DONALDSON, David & WEYMARK, John A., . "Ethically flexible Gini indices for income distributions in the continuum," CORE Discussion Papers RP -520, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. D'Antoni, Massimo, 1999. "Piecewise linear tax functions, progressivity, and the principle of equal sacrifice," Economics Letters, Elsevier, vol. 65(2), pages 191-197, November.
  15. Hutton, J P & Lambert, P J, 1980. "Evaluating Income Tax Revenue Elasticities," Economic Journal, Royal Economic Society, vol. 90(363), pages 901-06, December.
  16. Harrison, Alan, 1981. "Earnings by Size: A Tale of Two Distributions," Review of Economic Studies, Wiley Blackwell, vol. 48(4), pages 621-31, October.
  17. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July.
  18. Ok, Efe A., 1995. "On the principle of equal sacrifice in income taxation," Journal of Public Economics, Elsevier, vol. 58(3), pages 453-467, November.
  19. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, vol. 108(1), pages 111-140, January.
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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 0706, University of Otago, Department of Economics, revised Apr 2007.

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