Horizontal equity, income taxation and self-selection with an application to income tax credits

Yves Balcer*, Efraim Sadka

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper investigates the relationship between utilitarianism and horizontal equity in models of income taxation in particular and self-selection in general. An example involving well-behaved individual preferences is constructed in which a maximization of a utilitarian social welfare function leads via income taxation to horizontal inequities. Sufficient conditions for utilitarianism to bring horizontal equity are derived. The results are applied to the question of whether income tax credits are an appropriate way to treat differences in family size.

Original languageEnglish
Pages (from-to)291-309
Number of pages19
JournalJournal of Public Economics
Volume19
Issue number3
DOIs
StatePublished - Dec 1982

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