Emanuele, Canegrati (2007): A Contribution to the Positive Theory of Direct Taxation.
Download (379Kb) | Preview
In this paper I analyse a probabilistic voting model where political candidates choose a direct taxation policy to maximise the probability of winning elections. Society is divided into groups which have di¤erent preferences for consumption of leisure or, in other words, are di¤erently single-minded on the amount of leisure. The use of a probabilistic voting model characterized by the presence of single-minded groups breaks down the classic results obtained by using the median voter theorem, because it is no longer only the level of income which drives the equilibrium policies but also the ability of groups to focus on leisure. The robustness of these results is also demonstrated in the presence of heterogeneity in the labour income. Finally, using data from the Luxemburg Income Study, I demon- strate that the cohort-speci�c inequality is signi�cantly a¤ected by the structure of the taxation system and that policies chosen by politicians do not seem to be originated by the goal of equality.
|Item Type:||MPRA Paper|
|Original Title:||A Contribution to the Positive Theory of Direct Taxation|
|Keywords:||Probabilistic Voting Theory, Single-mindedness, Direct Tax- ation, Income Distribution|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy-Making and Implementation
|Depositing User:||Emanuele Canegrati|
|Date Deposited:||05. Dec 2007 15:23|
|Last Modified:||12. Feb 2013 07:19|
 Atkinson, A. B. (1970) On the Measurement of Inequality, Journal of Eco- nomic Theory, 2, pp.244-63.  Ambrosanio, M.F., Bordignon, M, Galmarini, U. and Panteghini, P. (1997) Lezioni di Teoria delle Imposte, Milan, ETAS  Atkinson, A. B. & Stiglitz, J. (1980) Lectures on public economics, McGraw Hill, London  Auerbach, A. (1985) The Theory of Excess Burden and Optimal Taxation, in Handbook of Public Economics, Vol. I, Elsevier.  Beckmann, K. (2002) How Leviathan Taxes, Constitutional Political Econ- omy, Vol.13, pp. 265-273.  Boadway, R. W. & Bruce, N. (1984), Welfare Economics, Basil Blackwell  Boadway, R. W. & Keen, M. (2000) Redistribution, in Handbook of Income Distribution, Amsterdam, Elsevier  Canegrati, E. (2006) The Single-Mindedness Theory; Micro-foundation and Application to Social Security Systems, London School of Economics, mimeo  Canegrati, E. (2007) A Probabilistic Voting Models of Indirect Taxation with Single-minded Groups, London School of Economics, mimeo  Coughlin, P. (1985) Elections with Redistributional Reputations. Prepared for the 1985 Carnegie-Mellon conference on Political Economy.  Coughlin, P. (1986) Elections and Income Distribution, Public Choice 50, pp. 27-91  Coughlin, P. (1992) Probabilistic Voting Theory, Cambridge University Press  Cowell, F. (2000) Measurement of Inequality, in Handbook of Income Dis- tribution, Amsterdam, Elsevier  Diamond, P. (1975) A Many-Person Ramsey Rule, Journal of Public Eco- nomics Vol.4, pp.335-42  Gans, J. S. & Smart, M. (1996) Majority Voting with Single-crossing Pref- erences, Journal of Public Economics 59, pp. 219-237  Gentry, W. Optimal Taxation, Columbia University, mimeo  Gottschalk, T. & Smeeding, T. (2000) Empirical Evidence on Income In- equality in Industrialized Countries, in Handbook of Income Distribution, Amsterdam, Elsevier  Hettich, W. & Winer, S. (1999), Democratic Choice and Taxation: A The- oretical and Empirical Analysis, Cambridge University Press  Hinich, M, Ledyard, J and Ordershook, P. (1973) A Theory of Electoral Equilibrium: A Spatial Analysis Based on the Theory of Games, Journal of Politics, 35; pp. 154-193  Kramer, G. (1983), Is there a demand for progressivity?, Public Choice 41, pp. 223-228  Itsumi, Y. (1974), Distributional E¤ect of Linear Income Tax Schedule, Review of Economics Studies 41, pp.371-382  Lindert, P. (2000) Three Centuries of Inequality in Britain and America, in Handbook of Income Distribution, Amsterdam, Elsevier  Lindbeck, A. & Weibull, J. (1987), Balanced-budget redistribution as the outcome of political competition. Public Choice 52(3): 273-297  Lindbeck, A. & Weibull, J. (1993) A model of Political Equilibrium in a Representative Democracy, Journal of Public Economics 51, pp. 195-209  Meltzer, A. & Richard, S. (1985) A Positive Theory of in-kind Transfers and the Negative Income Tax, Public Choice 47, pp.231-265  OECD (2001) Tax and the Economy A Comparative Assessment of OECD Countries, Tax Policy Studies No.6  OECD (2004) Recent Tax Policy Trends and Reforms in OECD Countries, Tax Policy Studies No.9  OECD (2006) Fundamental Reform of Personal Income Tax, Tax Policy Studies No.13  O¢ ce of National Statistics (2007) 2005 � 2006 Expenditure and Food Survey  Persson, T. & Tabellini, G. (2000), Political Economics: Explaining Eco- nomic Policy, MIT Press  Polo, M. (1998) Electoral Competition and Political Rents, IGIER, Milan, mimeo  Roberts, K. (1977) Voting over Income Tax Schedules, Journal of Public Economics 8, pp: 392-340  Romer, T. (1975) Individual Welfare, Majority Voting and the Properties of a Linear Income Tax, Journal of Public Economics 7, pp:163-168  Sen, A. K. (1973) On Economic Inequality, Oxford: Clarendon Press; and New York: Norton.  Svensson, J. (1997) The Control of Public Policy: Electoral Competition, Polarization and Primary Elections, The World Bank, Washington D.C. mimeo  WIDER (World Institute for Development Economics Research), (2000) World Income Inequality Database: User Guide and Data Sources. Helsinki: United Nations University