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On the equivalence between progressive taxation and inequality reduction

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  • JU, Biung-Ghi
  • MORENO-TERNERO, Juan D.

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

We establish the precise connections between progressive taxation and inequality reduction, in a setting where the level of tax revenue to be raised is endogenously fixed and tax schemes are balanced. We show that, in contrast with the traditional literature on taxation, the equivalence between inequality reduction and the combination of progressivity and income order preservation does not always hold in this setting. However, we show that, among rules satisfying consistency and, either revenue continuity, or revenue monotonicity, the equivalence remains intact.

Suggested Citation

  • JU, Biung-Ghi & MORENO-TERNERO, Juan D., 2007. "On the equivalence between progressive taxation and inequality reduction," LIDAM Discussion Papers CORE 2007002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2007002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Słoczyński, Tymon, 2012. "Zastosowanie zasady równych ofiar do oceny sprawiedliwości taryfy podatku dochodowego od osób fizycznych (PIT) w Polsce," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2012(10), October.
    2. Carmen Herrero & Juan Moreno-Ternero & Giovanni Ponti, 2010. "On the adjudication of conflicting claims: an experimental study," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(1), pages 145-179, January.
    3. Wulf Gaertner & Lars Schwettmann, 2017. "Burden sharing in deficit countries: a questionnaire-experimental investigation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(2), pages 113-144, June.
    4. Kasajima, Yoichi & Velez, Rodrigo A., 2010. "Non-proportional inequality preservation in gains and losses," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1079-1092, November.
    5. Miguel Ángel Mirás Calvo & Iago Núñez Lugilde & Carmen Quinteiro Sandomingo & Estela Sánchez Rodríguez, 2023. "Refining the Lorenz‐ranking of rules for claims problems on restricted domains," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 526-558, September.
    6. Carbonell-Nicolau, Oriol, 2025. "On progressive tax systems with heterogeneous preferences," Journal of Mathematical Economics, Elsevier, vol. 117(C).
    7. Biung-Ghi Ju & Juan Moreno-Ternero, 2011. "Progressive and merging-proof taxation," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(1), pages 43-62, February.
    8. Oriol Carbonell-Nicolau & Humberto Llavador, 2021. "Elasticity determinants of inequality-reducing income taxation," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(1), pages 163-183, March.
    9. Carbonell-Nicolau, Oriol & Llavador, Humberto, 2018. "Inequality reducing properties of progressive income tax schedules: the case of endogenous income," Theoretical Economics, Econometric Society, vol. 13(1), January.
    10. Satya R. Chakravarty & Palash Sarkar, 2022. "Inequality minimising subsidy and taxation," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(1), pages 53-67, May.
    11. Lambert Peter J. & Thoresen Thor O., 2012. "The Inequality Effects of a Dual Income Tax System," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-17, July.
    12. Oriol Carbonell-Nicolau & Humberto Llavador, 2024. "Social Preorders and Tax Progressivity," Working Papers 1459, Barcelona School of Economics.
    13. Kristof Bosmans & Erik Schokkaert, 2009. "Equality preference in the claims problem: a questionnaire study of cuts in earnings and pensions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(4), pages 533-557, November.
    14. Tymon Słoczyński, 2012. "Zastosowanie zasady równych ofiar do oceny sprawiedliwości taryfy podatku dochodowego od osób fizycznych (PIT) w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 10, pages 23-47.
    15. José-Manuel Giménez-Gómez & M. Carmen Marco-Gil & Juan-Francisco Sánchez-García, 2022. "New empirical insights into conflicting claims problems," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 13(4), pages 709-738, December.
    16. Thomson, William, 2015. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: An update," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 41-59.
    17. Biung-Ghi Ju & Juan D. Moreno-Ternero, 2006. "Progressivity, Inequality Reduction, and Merging-Proofness in Taxation," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200603, University of Kansas, Department of Economics, revised Feb 2006.
    18. Yoichi Kasajima & Rodrigo Velez, 2011. "Reflecting inequality of claims in gains and losses," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(2), pages 283-295, February.
    19. Carbonell-Nicolau, Oriol, 2024. "Inequality and bipolarization-reducing mixed taxation," Mathematical Social Sciences, Elsevier, vol. 132(C), pages 128-145.
    20. Oriol Carbonell-Nicolau & Humberto Llavador, 2018. "Further Results on the Inequality Reducing Properties of Income Tax Schedules," Departmental Working Papers 201801, Rutgers University, Department of Economics.

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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