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Politically Feasible Reforms of Non-Linear Tax Systems

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  • Felix Bierbrauer
  • Pierre C. Boyer
  • Andreas Peichl

Abstract

We study reforms of non-linear income tax systems from a political economy perspective. We present a median voter theorem for monotonic tax reforms, reforms so that the change in the tax burden is a monotonic function of income. We also provide an empirical analysis of tax reforms, with a focus on the US. We show that past reforms have, by and large, been monotonic. We also show that support by the median voter was aligned with majority support in the population. Finally, we develop sufficient statistics that enable to test whether a given tax system admits a politically feasible reform.

Suggested Citation

  • Felix Bierbrauer & Pierre C. Boyer & Andreas Peichl, 2017. "Politically Feasible Reforms of Non-Linear Tax Systems," CESifo Working Paper Series 6573, CESifo.
    • Handle: RePEc:ces:ceswps:_6573
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    More about this item

    Keywords

    non-linear income taxation; tax reforms; political economy; optimal taxation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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