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Generalized Social Marginal Welfare Weights for Optimal Tax Theory

Emmanuel Saez () and Stefanie Stantcheva

American Economic Review, 2016, vol. 106, issue 1, 24-45

Abstract: This paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using "generalized social marginal welfare weights." Optimum tax formulas take the same form as standard welfarist tax formulas by simply substituting standard marginal social welfare weights with those generalized weights. Weights directly capture society's concerns for fairness without being necessarily tied to individual utilities. Suitable weights can help reconcile discrepancies between the welfarist approach and actual tax practice, as well as unify in an operational way the most prominent alternatives to utilitarianism such as Libertarianism, equality of opportunity, or poverty alleviation. (JEL D60, D63, H21, H23, I38)

JEL-codes: D60 D63 H21 H23 I38 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20141362
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