Income Taxation and the Choice of the Tax Rate Schedule: Sacrifice Principles and "Just" Tax Rates
AbstractIn the history of economic thoughts the problem of a "just" tax rate structure has played an important role. The paper reconsiders the discussions of the last two centuries and sheds additional light on the concrete tax schedules using the more recent methods of tax theory. Even if the substitution effects which play an important role in the theory of optimal taxation are neglected, the slope in the diminishing marginal utility of income causes tax rate structures reaching from accelerated progression to delayed regression. Interestingly the principle of equal relative sacrifice combined with a Bernoulli utility function yields a delayed progression, which is connected with a negative income tax.
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Bibliographic InfoPaper provided by Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät in its series Finanzwissenschaftliche Diskussionsbeiträge with number 62.
Date of creation: Jun 2011
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Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School)
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-10-09 (Accounting & Auditing)
- NEP-ALL-2011-10-09 (All new papers)
- NEP-PBE-2011-10-09 (Public Economics)
- NEP-PUB-2011-10-09 (Public Finance)
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