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Should Egalitarians Expropriate Philanthropists?

  • Indraneel Dasgupta,
  • Ravi Kanbur

Wealthy individuals often voluntarily provide public goods that the poor also consume. Such philanthropy is perceived as legitimizing one’s wealth. Governments routinely exempt the rich from taxation on grounds of their charitable expenditure. We examine the normative logic of this exemption. We show that, rather than reducing it, philanthropy may aggravate absolute inequality in welfare achievement, while leaving the change in relative inequality ambiguous. Additionally, philanthropic preferences may increase the effectiveness of policies to redistribute income, instead of weakening them. Consequently, the general normative case for exempting the wealthy from expropriation, on grounds of their public goods contributions, appears dubious.

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Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 07/13.

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Handle: RePEc:not:notcre:07/13
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  2. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975, March.
  3. Indraneel Dasgupta & Ravi Kanbur, 2005. "Community and anti-poverty targeting," Journal of Economic Inequality, Springer, vol. 3(3), pages 281-302, December.
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  10. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Bridging Communal Divides: Separation, Patronage, Integration," Working Papers 127235, Cornell University, Department of Applied Economics and Management.
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  13. Buhong Zheng, 2007. "Unit-Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, vol. 74(293), pages 97-111, 02.
  14. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer, vol. 11(2), pages 83-97, June.
  15. Bossert, Walter & Pfingsten, Andreas, 1990. "Intermediate inequality: concepts, indices, and welfare implications," Mathematical Social Sciences, Elsevier, vol. 19(2), pages 117-134, April.
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