Fairness gaps for earnings tax design

Erwin Ooghe, Erik Schokkaert and Hannes Serruys

No 746851, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: In a setting with skill and preference heterogeneity, we characterize a family of social welfare measures that aggregate fairness gaps, de ned as the di erence between the money metric utilities that individuals have and the money-metric utilities they should have in a fair society. Each welfare measure can be decomposed into government revenues (size), excess burden (ine ciency), and unfair inequality (inequity). As a proof of concept, we evaluate four hypothetical earnings tax reforms based on two normative parameters: the degree of unfairness aversion and the degree of compensation for productive skills.

Pages: 43
Date: 2023-09
New Economics Papers: this item is included in nep-pbe
Note: paper number DPS 23.15
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Forthcoming in FEB Research Report Department of Economics

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Related works:
Journal Article: Fairness Gaps for Earnings Tax Design (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:746851

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