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Balancing inequality reduction against equality of liabilities in a taxation scheme

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  • Chakravarty, Satya R.
  • Sarkar, Palash

Abstract

This paper designs a taxation policy by maintaining a balance between post-tax income equality and equality of tax burdens. Analytically, the problem is formulated as a constrained optimisation problem achieving controlled trade-off between the equality in tax distribution and post-tax income equality. For the Gini and the Bonferroni indices, the optimisation problem becomes a linear programming problem (LPP). From a practical point of view, the LPP-based formulation provides a practical and effective computational tool based on an economic optimisation principle.

Suggested Citation

  • Chakravarty, Satya R. & Sarkar, Palash, 2025. "Balancing inequality reduction against equality of liabilities in a taxation scheme," Journal of Mathematical Economics, Elsevier, vol. 118(C).
    • Handle: RePEc:eee:mateco:v:118:y:2025:i:c:s0304406825000217
    DOI: 10.1016/j.jmateco.2025.103104
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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