Fiscal rules of income transformation

Isabel Correia ()

Economic Theory, 1999, vol. 13, issue 1, 199-205

Abstract: The purpose of this paper is to characterize the class of fiscal rules of income transformation which are equity improving and, at the same time, preserve the ranking of existing distributions. Contrary to the related literature individual well-being depends not just on income but also on prices. We show that, when the environment is restricted such that a general transformation class still can be defined, the only "desirable" fiscal rule is the simple redistributive linear taxation schedule, of the same type that is the rule in practice in most economies.

JEL-codes: D31 D63 H24 (search for similar items in EconPapers)
Date: 1998-12-04
Note: Received: May 8, 1997; revised version: September 15, 1997
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Citations: View citations in EconPapers (2)

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