Optimal Utilitarian Taxation and Horizontal Equity

Arbeitspapier

We impose a horizontal equity restriction on the problem of finding the optimal utilitarian tax mix. The horizontal equity constraint requires that individuals with the same ability have to pay the same amount of taxes regardless of their preferences for leisure. Contrary to normal findings, we find that a good that is complementary to leisure need not be discouraged by the tax system, and that a good that normally should be discouraged by the tax system need not be taxed at a positive rate even if the economy is composed of only two private commodities plus leisure. Similarly, the marginal effective tax rate need not be equal to zero at the top when the tax mix obeys the horizontal equity constraint.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2002:19

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
• Subject: Horizontal equity ; optimal taxation ; heterogeneous preferences ; utilitarianism ; Optimale Besteuerung ; Verteilungsgerechtigkeit ; Utilitarismus ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jordahl, Henrik ; Micheletto, Luca
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/82896
• URN: urn:nbn:se:uu:diva-4450
• Last update: 10.03.2025, 11:43 AM CET