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Is There a Demand for Income Tax Progressivity?

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  • Jean Hindriks

    (Queen Mary and Westfield College, University of London)

Abstract

Recently Marhuenda and Ortuno-Ortin (1995) have provided a popular support for progressivity theorem that says that a marginal progressive tax always defeats a marginal regressive tax as long as individuals vote for the tax scheme minimizing their tax liabilities and the median income is less than the mean income. In this paper we provide, under similar circumstances, a popular support for regressivity theorem according to which more marginal regressivity (or less marginal progressivity) can always defeat any existing tax scheme. This move towards more regressivity (or less progressivity) is supported by the extremes of the income distribution. Combining this result with Marhuenda and Ortuno-Ortin's result implies that vote cycling is inevitable and that the demand for progressivity cannot be established in the standard Downsian framework with self-interested voters.

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Bibliographic Info

Paper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 415.

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Date of creation: Jun 2000
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Handle: RePEc:qmw:qmwecw:wp415

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Keywords: Voting; Redistribution; Income tax progressivity;

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References

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  1. John E. Roemer, 1999. "The Democratic Political Economy of Progressive Income Taxation," Econometrica, Econometric Society, vol. 67(1), pages 1-20, January.
  2. Myles, Gareth D., 2000. "On the optimal marginal rate of income tax," Economics Letters, Elsevier, vol. 66(1), pages 113-119, January.
  3. Philippe De Donder & Jean Hindriks, 2000. "The Politics of Progressive Income Taxation with Incentive Effects," Working Papers 416, Queen Mary, University of London, School of Economics and Finance.
  4. Francisco Marhuenda & Ignacio Ortuño Ortín, 1995. "Popular Support For Progressive Taxation," Working Papers. Serie AD 1995-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Kramer, Gerald H. & Snyder, James M., 1983. "Fairness, Self-Interest, and the Politics of the Progressive Income Tax," Working Papers 498, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. De Donder, Philippe & Le Breton, Michel & Truchon, Michel, 2000. "Choosing from a weighted tournament1," Mathematical Social Sciences, Elsevier, vol. 40(1), pages 85-109, July.
  7. Marhuenda, Francisco & Ortuno-Ortin, Ignacio, 1995. "Popular support for progressive taxation," Economics Letters, Elsevier, vol. 48(3-4), pages 319-324, June.
  8. Mitra, Tapan & Ok, Efe A. & Kockesen, Levent, 1998. "Popular support for progressive taxation and the relative income hypothesis," Economics Letters, Elsevier, vol. 58(1), pages 69-76, January.
  9. Young, H Peyton, 1990. "Progressive Taxation and Equal Sacrifice," American Economic Review, American Economic Association, vol. 80(1), pages 253-66, March.
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Citations

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Cited by:
  1. Soumyanetra Munshi, 2011. "On existence of pure strategy equilibrium with endogenous income," Social Choice and Welfare, Springer, vol. 37(1), pages 1-37, June.
  2. Oriol Carbonell-Nicolau, 2007. "A Positive Theory of Income Taxation," Departmental Working Papers 200706, Rutgers University, Department of Economics.
  3. Zsofia Barany, 2011. "Income inequality and the progressivity of taxes in a coalition formation model," Sciences Po publications info:hdl:2441/eu4vqp9ompq, Sciences Po.
  4. Matias Nunez, 2007. "Tax avoidance and the political appeal of progressivity," Working Papers hal-00243060, HAL.
  5. Harms, Philipp & Zink, Stefan, 2003. " Eating the Rich vs. Feeding the Poor: Borrowing Constraints and the Reluctance to Redistribute," Public Choice, Springer, vol. 116(3-4), pages 351-66, September.
  6. Jenny De Freitas, 2009. "A Probabilistic Voting Model of Progressive Taxation with Incentive Effects," DEA Working Papers 34, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  7. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09i8hj22lpn is not listed on IDEAS

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