Optimal Income Taxation Theory and Principles of Fairness

Marc Fleurbaey and Francois Maniquet

Journal of Economic Literature, 2018, vol. 56, issue 3, 1029-79

Abstract: The achievements and limitations of the classical theory of optimal labor-income taxation based on social welfare functions are now well known. Even though utilitarianism still dominates public economics, recent interest has arisen for broadening the normative approach and making room for fairness principles such as desert or responsibility. Fairness principles sometimes provide immediate recommendations about the relative weights to assign to various income ranges, but in general require a careful choice of utility representations embodying the relevant interpersonal comparisons. The main message of this paper is that the traditional tool of welfare economics, the social welfare function framework, is flexible enough to incorporate many approaches, from egalitarianism to libertarianism.

JEL-codes: D63 H21 H24 J24 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/jel.20171238
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Citations: View citations in EconPapers (36)

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Working Paper: Optimal income taxation theory and principles of fairness (2018)
Working Paper: Optimal income taxation theory and principles of fairness (2017)
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