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Progressive and merging-proof taxation

  • Biung-Ghi Ju

    ()

    (Department of Economics, Korea University)

  • Juan D. Moreno-Ternero

    ()

    (Department of Economic Theory, Universidad de Málaga)

We investigate the implications and logical relations between progressivity (a principle of distributive justice) and merging-proofness (a strategic principle) in taxation. By means of two characterization results, we show that these two principles are intimately related, despite their different nature. In particular, we show that, in the presence of continuity and consistency (a widely accepted framework for taxation) progressivity implies merging-proofness and that the converse implication holds if we add an additional strategic principle extending the scope of merging-proofness to a multilateral setting. By considering operators on the space of taxation rules, we also show that progressivity is slightly more robust than merging-proofness.

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File URL: http://webdeptos.uma.es/THEconomica/malagawpseries/Papers/METCwp2009-7.pdf
File Function: First version, 2009
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Paper provided by Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center in its series Working Papers with number 2009-7.

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Length: 19 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:mal:wpaper:2009-7
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Web page: http://webdeptos.uma.es/THEconomica/malagawpseries/METC.html
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  1. Toru Hokari & William Thomson, 2007. "On properties of division rules lifted by bilateral consistency," RCER Working Papers 536, University of Rochester - Center for Economic Research (RCER).
  2. Moulin, Hervé, 2008. "Proportional scheduling, split-proofness, and merge-proofness," Games and Economic Behavior, Elsevier, vol. 63(2), pages 567-587, July.
  3. Biung-Ghi Ju & Juan D. Moreno-Ternero, 2007. "On the equivalence between progressive taxation and inequality reduction," Discussion Paper Series 0718, Institute of Economic Research, Korea University.
  4. Ju, Biung-Ghi & Miyagawa, Eiichi & Sakai, Toyotaka, 2007. "Non-manipulable division rules in claim problems and generalizations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 1-26, January.
  5. FLEURBAEY, Marc & MANIQUET, François, . "Fair income tax," CORE Discussion Papers RP -1845, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Herrero, Carmen & Villar, Antonio, 2001. "The three musketeers: four classical solutions to bankruptcy problems," Mathematical Social Sciences, Elsevier, vol. 42(3), pages 307-328, November.
  7. Eichhorn, Wolfgang & Funke, Helmut & Richter, Wolfram F., 1984. "Tax progression and inequality of income distribution," Journal of Mathematical Economics, Elsevier, vol. 13(2), pages 127-131, October.
  8. Juan Moreno-Ternero, 2006. "Composition, Securement, and Concede-and-divide," Spanish Economic Review, Springer, vol. 8(3), pages 227-237, September.
  9. Fellman, J, 1976. "The Effect of Transformations on Lorenz Curves," Econometrica, Econometric Society, vol. 44(4), pages 823-24, July.
  10. Juan Moreno-Ternero & Antonio Villar, 2006. "New characterizations of a classical bankruptcy rule," Review of Economic Design, Springer, vol. 10(2), pages 73-84, August.
  11. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
  12. Thomson, William & Yeh, Chun-Hsien, 2008. "Operators for the adjudication of conflicting claims," Journal of Economic Theory, Elsevier, vol. 143(1), pages 177-198, November.
  13. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, 09.
  14. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  15. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
  16. Chambers, Christopher P. & Thomson, William, 2002. "Group order preservation and the proportional rule for the adjudication of conflicting claims," Mathematical Social Sciences, Elsevier, vol. 44(3), pages 235-252, December.
  17. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
  18. Juan D. Moreno-Ternero, 2007. "Bankruptcy Rules And Coalitional Manipulation," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 105-118.
  19. M. Angeles de Frutos, 1999. "Coalitional manipulations in a bankruptcy problem," Review of Economic Design, Springer, vol. 4(3), pages 255-272.
  20. Biung-Ghi Ju, 2003. "Manipulation via merging and splitting in claims problems," Review of Economic Design, Springer, vol. 8(2), pages 205-215, October.
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