Nontaxable income and necessary consumption: the Rousseau’s paradox of fiscal egalitarianism
AbstractThe traditional concept of a strict minimum of necessary consumption and nontaxable income equal for all taxpayers embedded in most current income-tax systems is the result of a paradox of fiscal egalitarianism. The paper shows that substituting the traditional notion of a strict minimum of nontaxable income (Surplus Income Tax Method) for a scheme of growing personal allowances to meet the amounts of necessary consumption required by the different living standards of the taxpayers (Discretionary Income Tax Method) generates an income-tax scheme more progressive than the traditional one. In the paper we also show that this alternative proposal for nontaxable incomes generates an after-tax income distribution less unequal (Lorenz dominance) and superior in terms of social welfare (Atkinson, 1970).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 32900.
Date of creation: 11 Aug 2011
Date of revision:
nontaxable income; necessary consumption; progressivity; tax burden; income distribution;
Other versions of this item:
- A. Faíña & J. López-Rodríguez & L. Varela-Candamio, 2013. "Nontaxable income and necessary consumption: the Rousseau's paradox of fiscal egalitarianism," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 45(30), pages 4248-4259, October.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 111-140, January.
- Mitra, T. & Ok, E.A., 1995.
"On the Equitability of Progressive Taxation,"
Working Papers, C.V. Starr Center for Applied Economics, New York University
95-25, C.V. Starr Center for Applied Economics, New York University.
- Young, H Peyton, 1990. "Progressive Taxation and Equal Sacrifice," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 253-66, March.
- Keen, Michael & Papapanagos, Harry & Shorrocks, Anthony, 2000. "Tax Reform and Progressivity," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(460), pages 50-68, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.