Balancing inequality reduction against equality of liabilities in a taxation scheme

Satya R. Chakravarty and Palash Sarkar

Journal of Mathematical Economics, 2025, vol. 118, issue C

Abstract: This paper designs a taxation policy by maintaining a balance between post-tax income equality and equality of tax burdens. Analytically, the problem is formulated as a constrained optimisation problem achieving controlled trade-off between the equality in tax distribution and post-tax income equality. For the Gini and the Bonferroni indices, the optimisation problem becomes a linear programming problem (LPP). From a practical point of view, the LPP-based formulation provides a practical and effective computational tool based on an economic optimisation principle.

Keywords: Linear programming; Inequality; Taxation; Equality of incomes/equality of taxes trade-off; Gini and Bonferroni indices (search for similar items in EconPapers)
JEL-codes: D31 D63 H24 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:118:y:2025:i:c:s0304406825000217

DOI: 10.1016/j.jmateco.2025.103104

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