Equivalence scales, horizontal equity and optimal taxation under utilitarianism

Yves Balcer*, Efraim Sadka

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Scopus citations


This paper analyzes the question of how differences in family size should be treated by the income tax system in order to achieve horizontal equity. Family size is incorporated into the demand system by the procedure of demographic scaling. Horizontal equity is defined as 'equal treatment of equals'. It is shown that when lump-sum taxes are not available and the government has to rely on income taxation, then the only way to entail equal utilities for household of different size is to equate the labor supplies and the per-standard-adult consumptions of these households.

Original languageEnglish
Pages (from-to)79-97
Number of pages19
JournalJournal of Public Economics
Issue number1
StatePublished - Feb 1986


FundersFunder number
Foerder Institute for Economic Research by Bank Leumi Le-Israel
National Science FoundationDAR-7917376


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