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Talent, equality of opportunity and optimal non-linear income tax

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  • Alain Trannoy

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We adopt a philosophical perspective of equality of opportunity and address the issue of whether outcome inequalities are legitimate when they come from differences in talent. We propose a cumulative definition of talent. In a dynamic setting, talent is a by-product of past-effort, current effort and innate talent, which becomes a residual as time goes by. It implies that talent can change from the status of a circumstance when people are young to an almost responsibility variable when people are getting older. We plug this definition of talent into the Mirrlees model of optimal non-linear income tax and we show that the conflict between the principle of compensation and the principle of natural reward boils down to the optimal income tax with Rawlsian weights in the second-best setting.

Suggested Citation

  • Alain Trannoy, 2019. "Talent, equality of opportunity and optimal non-linear income tax," Post-Print hal-02482031, HAL.
  • Handle: RePEc:hal:journl:hal-02482031
    DOI: 10.1007/s10888-019-09409-7
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    References listed on IDEAS

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    Cited by:

    1. Laurent Simula & Alain Trannoy, 2022. "Gini and Optimal Income Taxation by Rank," American Economic Journal: Economic Policy, American Economic Association, vol. 14(3), pages 352-379, August.
    2. Laurent Simula & Alain Trannoy, 2020. "Bunching and Rank-Dependent Optimal Income Taxation," CESifo Working Paper Series 8443, CESifo.
    3. Anis Saidi & Mekki Hamdaoui & Wajdi Moussa, 2021. "Assessing Policy Effectiveness in Reducing Inequality of Opportunity in Access to Public Services and Education Among Tunisian Children," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 993-1018, September.
    4. Kristoffer Berg & Morten Håvarstein & Magnus E. Stubhaug, 2024. "Meritocratic Labor Income Taxation," CESifo Working Paper Series 11058, CESifo.

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    More about this item

    Keywords

    Talent; Effort; Equality of opportunity; Optimal income taxation;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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