Income taxation and the choice of the tax rate schedule : sacrifice principles and "just" tax rates

  • In the history of economic thoughts the problem of a "just" tax rate structure has played an important role. The paper reconsiders the discussions of the last two centuries and sheds additional light on the concrete tax schedules using the more recent methods of tax theory. Even if the substitution effects which play an important role in the theory of optimal taxation are neglected, the slope in the diminishing marginal utility of income causes tax rate structures reaching from accelerated progression to delayed regression. Interestingly the principle of equal relative sacrifice combined with a Bernoulli utility function yields a delayed progression, which is connected with a negative income tax.

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Author:Hans-Georg Petersen
Series (Serial Number):Finanzwissenschaftliche Diskussionsbeiträge (Bd. 62)
Document Type:Monograph/Edited Volume
Year of Completion:2011
Publishing Institution:Universität Potsdam
Release Date:2011/09/28
Tag:cardinal utility function; income tax; sacrifice principle; tax rate schedule
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL Classification:B History of Economic Thought, Methodology, and Heterodox Approaches (Updated!) / B1 History of Economic Thought through 1925 / B13 Neoclassical through 1925
D Microeconomics / D3 Distribution / D31 Personal Income, Wealth, and Their Distributions
H Public Economics / H2 Taxation, Subsidies, and Revenue / H21 Efficiency; Optimal Taxation
H Public Economics / H2 Taxation, Subsidies, and Revenue / H24 Personal Income and Other Nonbusiness Taxes and Subsidies
Licence (German):License LogoKeine Nutzungslizenz vergeben - es gilt das deutsche Urheberrecht
Notes extern:
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