Procedurally Fair Taxation
We study the implications of procedural fairness on income taxation. We formulateprocedural fairness as a particular non-cooperative bargaining game and examine thestationary subgame perfect equilibria of the game. The equilibrium outcome is called tax equilibrium and is shown to be unique. The procedurally fair tax rate is defined as the tax rate that results in the limit of tax equilibria when the probability that negotiations break down converges to zero. The procedurally fair tax rate is shown to be unique. We also provide a characterization of the procedurally fair tax rate that involves the probability mass of below average income citizens and a particular measure of the citizens'' boldness. This characterization is then used to show that in a number of interesting cases the procedurally fair tax rate equals the probability mass of below average income citizens.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 616, 6200 MD Maastricht|
Phone: +31 (0)43 38 83 830
Web page: http://www.maastrichtuniversity.nl/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N. Gregory Mankiw & Matthew Weinzierl & Danny Yagan, 2009.
"Optimal Taxation in Theory and Practice,"
Journal of Economic Perspectives,
American Economic Association, vol. 23(4), pages 147-74, Fall.
- Mankiw, N. Gregory & Weinzierl, Matthew Charles & Yagan, Danny Ferris, 2009. "Optimal Taxation in Theory and Practice," Scholarly Articles 4263739, Harvard University Department of Economics.
- N. Gregory Mankiw & Matthew C. Weinzierl & Danny Yagan, 2009. "Optimal Taxation in Theory and Practice," Harvard Business School Working Papers 09-140, Harvard Business School.
- N. Gregory Mankiw & Matthew Weinzierl & Danny Yagan, 2009. "Optimal Taxation in Theory and Practice," NBER Working Papers 15071, National Bureau of Economic Research, Inc.
- Aumann, Robert J & Kurz, Mordecai, 1977. "Power and Taxes," Econometrica, Econometric Society, vol. 45(5), pages 1137-61, July.
- Tasos Kalandrakis, 2006.
"Regularity of pure strategy equilibrium points in a class of bargaining games,"
Society for the Advancement of Economic Theory (SAET), vol. 28(2), pages 309-329, 06.
- Tasos Kalandrakis, 2004. "Regularity of Pure Strategy Equilibrium Points in a Class of Bargaining Games," Wallis Working Papers WP37, University of Rochester - Wallis Institute of Political Economy.
- Cardona, Daniel & Ponsati, Clara, 2007. "Bargaining one-dimensional social choices," Journal of Economic Theory, Elsevier, vol. 137(1), pages 627-651, November.
- Imai, Haruo & Salonen, Hannu, 2000. "The representative Nash solution for two-sided bargaining problems," Mathematical Social Sciences, Elsevier, vol. 39(3), pages 349-365, May.
- Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2010.
"One-dimensional bargaining with Markov recognition probabilities,"
Journal of Economic Theory,
Elsevier, vol. 145(1), pages 189-215, January.
- Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2007. "One-dimensional Bargaining with Markov Recognition Probabilities," Research Memorandum 044, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Ariel Rubinstein, 2010.
"Perfect Equilibrium in a Bargaining Model,"
Levine's Working Paper Archive
252, David K. Levine.
- J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
- Roth, Alvin E, 1989. "Risk Aversion and the Relationship between Nash's Solution and Subgame Perfect Equilibrium of Sequential Bargaining," Journal of Risk and Uncertainty, Springer, vol. 2(4), pages 353-65, December.
- Gary E. Bolton & Jordi Brandts & Axel Ockenfels, 2000.
"Fair Procedures. Evidence from Games Involving Lotteries,"
UFAE and IAE Working Papers
483.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Gary E Bolton & Jordi Brandts & Axel Ockenfels, 2005. "Fair Procedures: Evidence from Games Involving Lotteries," Economic Journal, Royal Economic Society, vol. 115(506), pages 1054-1076, October.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
- Cho, Seok-ju & Duggan, John, 2003.
"Uniqueness of stationary equilibria in a one-dimensional model of bargaining,"
Journal of Economic Theory,
Elsevier, vol. 113(1), pages 118-130, November.
- Seok-ju Cho & John Duggan, 2001. "Uniqueness of Stationary Equilibria in a one-Dimensional Model of Bargaining," Wallis Working Papers WP23, University of Rochester - Wallis Institute of Political Economy.
- Predtetchinski Arkadi, 2007. "One-dimensional bargaining with unanimity rule," Research Memorandum 011, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
When requesting a correction, please mention this item's handle: RePEc:unm:umamet:2011024. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charles Bollen)
If references are entirely missing, you can add them using this form.