Optimal Taxation When the Tax Burden Matters

Robin Jessen, Maria Metzing and Davud Rostam-Afschar

FinanzArchiv: Public Finance Analysis, 2022, vol. 78, issue 3, 312-340

Abstract: Survey evidence shows that the magnitude of the tax liability plays a role in value judgements about which groups deserve tax breaks. We demonstrate that the German taxtransfer system conflicts with a welfarist inequality averse social planner. It is consistent with a planner who is averse to both inequality and high tax liabilities. The tax-transfer schedule reflects non-welfarist value judgements of citizens or non-welfarist aims of policy makers. We extend our analysis to several European countries and the USA to show that their redistributive systems can be rationalized with an inequality averse social planner for whom the tax burden matters.

Keywords: justness; optimal taxation; income redistribution; inequality; welfare criteria; optimaltaxation; incomeredistribution; welfarecriteria (search for similar items in EconPapers)
JEL-codes: D60 D63 H21 H23 I38 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1628/fa-2022-0004

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