THE EQUAL ABSOLUTE SACRIFICE PRINCIPLE REVISITED

Peter J. Lambert and Helen T. Naughton

Journal of Economic Surveys, 2009, vol. 23, issue 2, pages 328-349

Abstract: We summarize the literature on equal absolute sacrifice income taxes, and make some extensions. We adapt the utilitarian equal sacrifice criterion to a wide class of rank-dependent social welfare functions, and find that liabilities depend on both income and position in the distribution. We investigate whether such taxes need be progressive, using a combination of analytics and simulation, and in the process uncover tax functions not previously recognized as equating sacrifices. Finally, out of horizontal equity considerations a new concept of 'the equal treatment of equals' by an income tax emerges, with implications for future work whose significance is discussed. Copyright © 2009 Blackwell Publishing Ltd.

Date: 2009

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