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Positional equity and equal sacrifice: design principles for an EU-wide income tax?

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  • Peter J. Lambert

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    (Department of Economics, University of Oregon)

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    Abstract

    Conditions are explored under which a putative EU-wide layer of income tax, additional to the national income taxes of the Member States, would: (a) be horizontally equitable, taking the equals in different EU counties to be those at the same percentile points in the country-specific income distributions, assuming these to differ in logarithms by location and scale only; (b) satisfy an extended equity criterion, that of equal progression among equals; and (c) engender equal sacrifices from the citizens of each country in terms of rank-dependent and utilitarian social evaluation functions. Numerical simulations are undertaken to explore the form that such an EU-wide income tax would take and the properties it would have.

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0706.pdf
    File Function: First version, 2007
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    Bibliographic Info

    Paper provided by University of Otago, Department of Economics in its series Working Papers with number 0706.

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    Length: 20 pages
    Date of creation: Apr 2007
    Date of revision: Apr 2007
    Handle: RePEc:otg:wpaper:0706

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    1. John Roemer, 2006. "Review essay, “The 2006 world development report: Equity and development”," Journal of Economic Inequality, Springer, vol. 4(2), pages 233-244, August.
    2. Peter J. Lambert & Helen T. Naughton, 2006. "The Equal Sacrifice Principle Revisited," University of Oregon Economics Department Working Papers 2006-4, University of Oregon Economics Department, revised 01 Jun 2006.
    3. Cnossen,Sijbren, 2002. "Tax policy in the european union, A review of issues and options," Research Memorandum 023, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer, vol. 7(6), pages 619-640, December.
    5. Lambert, Peter J. & Millimet, Daniel L. & Slottje, Daniel, 2003. "Inequality aversion and the natural rate of subjective inequality," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1061-1090, May.
    6. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April.
    7. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    8. Udo Ebert & Peter J Lambert, . "Horizontal Equity and Progession when Equivalence Scales are not Constant," Discussion Papers 02/02, Department of Economics, University of York.
    9. Young, H Peyton, 1990. "Progressive Taxation and Equal Sacrifice," American Economic Review, American Economic Association, vol. 80(1), pages 253-66, March.
    10. Dardanoni, Valentino & Lambert, Peter J., 2002. "Progressivity comparisons," Journal of Public Economics, Elsevier, vol. 86(1), pages 99-122, October.
    11. Peter J. Lambert, 2004. "Income Taxation and Equity," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 4(2), pages 39-54, July.
    12. Sijbren Cnossen, 2002. "Tax Policy in the European Union: A Review of Issues and Options," CESifo Working Paper Series 758, CESifo Group Munich.
    13. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    14. Cholezas, Ioannis & Tsakloglou, Panos, 2007. "Earnings Inequality in Europe: Structure and Patterns of Inter-Temporal Changes," IZA Discussion Papers 2636, Institute for the Study of Labor (IZA).
    15. Maria Cubel & Peter Lambert, 2002. "Progression-neutral income tax reforms and horizontal inequity," Journal of Economics, Springer, vol. 9(1), pages 1-8, December.
    16. 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.
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