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Fair optimal tax with endogenous productivities

Author

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  • Fleurbaey, M.
  • Valletta, G.

    (Microeconomics & Public Economics)

Abstract

What is a good incentive-compatible policy when one wants to respect individual choices of labor and human capital but eliminate inequalities due to unequal access to human capital and different returns to human capital, and when earnings and human capital expenditures are the only verifiable variables? We propose a social ordering that incorporates this goal and we analyze the evaluation of tax reforms and the properties of optimal linear and non-linear taxes. For reform evaluation and for optimal non-linear taxation, the focus is on the situation of individuals with the most disadvantaged characteristics who work full time and spend a certain (high) amount in human capital.

Suggested Citation

  • Fleurbaey, M. & Valletta, G., 2013. "Fair optimal tax with endogenous productivities," Research Memorandum 024, Maastricht University, Graduate School of Business and Economics (GSBE).
  • Handle: RePEc:unm:umagsb:2013024
    DOI: 10.26481/umagsb.2013024
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    File URL: https://cris.maastrichtuniversity.nl/ws/files/1422509/guid-b0e671df-3a77-403d-a136-5ea8796cdce2-ASSET1.0.pdf
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    References listed on IDEAS

    as
    1. VALLETTA, Giacomo, 2012. "Health, fairness and taxation," CORE Discussion Papers 2012016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. repec:cor:louvrp:-1235 is not listed on IDEAS
    3. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591.
    4. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521887427, April.
    5. repec:cor:louvrp:-1845 is not listed on IDEAS
    6. Luft, Harold S, 1975. "The Impact of Poor Health on Earnings," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 43-57, February.
    7. Darío Maldonado, 2008. "Education policies and optimal taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(2), pages 131-143, April.
    8. Emmanuel Saez & Stefanie Stantcheva, 2016. "Generalized Social Marginal Welfare Weights for Optimal Tax Theory," American Economic Review, American Economic Association, vol. 106(1), pages 24-45, January.
    9. repec:cor:louvrp:-1805 is not listed on IDEAS
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