A Contribution to the Positive Theory of Direct Taxation
AbstractIn this paper I analyse a probabilistic voting model where political candidates choose a direct taxation policy to maximise the probability of winning elections. Society is divided into groups which have di¤erent preferences for consumption of leisure or, in other words, are di¤erently single-minded on the amount of leisure. The use of a probabilistic voting model characterized by the presence of single-minded groups breaks down the classic results obtained by using the median voter theorem, because it is no longer only the level of income which drives the equilibrium policies but also the ability of groups to focus on leisure. The robustness of these results is also demonstrated in the presence of heterogeneity in the labour income. Finally, using data from the Luxemburg Income Study, I demon- strate that the cohort-speci�c inequality is signi�cantly a¤ected by the structure of the taxation system and that policies chosen by politicians do not seem to be originated by the goal of equality.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6117.
Date of creation: 05 Dec 2007
Date of revision:
Probabilistic Voting Theory; Single-mindedness; Direct Tax- ation; Income Distribution;
Other versions of this item:
- Canegrati, Emanuele, 2007. "A Contribution to the Positive Theory of Indirect Taxation," MPRA Paper 6116, University Library of Munich, Germany.
- 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
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-08 (All new papers)
- NEP-PBE-2007-12-08 (Public Economics)
- NEP-PUB-2007-12-08 (Public Finance)
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