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Tagging And Redistributive Taxation

Author

Listed:
  • Robin Boadway
  • Pierre Pestieau

    (Universite de Liege)

Abstract

We study the optimal redistributive tax structure when the population can be disaggregated into tagged groups. We begin with the case in which the tag has no normative significance, but simply separates the population into identifiable groups with different distributions of ability-types. Under reasonable circumstances, the tax system will be more redistributive in the tagged group with the higher proportion of high-ability persons. We then extend the analysis to the case where the tag reflects differences in needs, that is, differences in the resources required to achieve a given level of utility, for example, due to a medical condition or a disability. The amount of compensation given for needs depends on whether the income tax structure is differentiated by needs groups.

Suggested Citation

  • Robin Boadway & Pierre Pestieau, 2006. "Tagging And Redistributive Taxation," Working Paper 1071, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1071
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    optimal income tax; tagging; needs;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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