The Equal-Sacrifice Social Welfare Function with an Application to Optimal Income Taxation

Kristoffer Berg and Paolo Giovanni Piacquadio

No 8505, CESifo Working Paper Series from CESifo

Abstract: We propose and axiomatically characterize a family of welfare criteria that prioritize individuals making larger sacrifices. By combining efficiency with a concern for equality of sacrifice, our criteria avoid serious shortcomings of utilitarianism. We illustrate our results within the Mirrleesian optimal taxation framework. Our simulated equal-sacrifice optimal tax schedule for the US has marginal tax rates in line with the US tax system and about 20 percentage points lower than the utilitarian recommendation.

Keywords: equal-sacrifice principle; optimal income taxation; welfare criterion (search for similar items in EconPapers)
JEL-codes: D63 H21 I31 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ore, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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