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Voting over piece-wise linear tax methods

  • Juan D. Moreno-Ternero

    ()

    (U. de Málaga, U. Pablo de Olavide y CORE, Universit´e catholique de Louvain)

We analyze the problem of choosing the most appropriate method for apportioning taxes in a democracy. We consider a simple model of taxation and restrict our attention to piece-wise linear tax methods, which are almost ubiquitous in advanced democracies worldwide. In spite of facing an impossibility result saying that if we allow agents to vote for any piece-wise linear tax method no equilibrium exists, we show that if we limit the domain of admissible methods in a meaningful way, albeit not restrictive, an equilibrium does exist. We also show that, for such a domain, a wide variety of methods can be supported in equilibrium. This last result provides rationale for some activities of special interest groups.

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File URL: http://www.upo.es/serv/bib/wps/econ1002.pdf
File Function: First version, 2010
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Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 10.02.

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Length: 21 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:pab:wpaper:10.02
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