Income taxation and equity: new dominance criteria with a microsimulation application

Paolo Brunori, Flaviana Palmisano and Vito Peragine

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper addresses the problem of the normative evaluation of income tax systems and income tax reforms. While most of the existing criteria, framed in the utilitarian tradition, are uniquely based on information about individual incomes, this paper, building upon the opportunity egalitarian theory, proposes new equity criteria which take into account also the socio-economic characteristics of individuals. Suitable dominance conditions that can be used to rank alternative tax systems are derived by means of an axiomatic approach. Moreover, the theoretical results are used to assess the redistributive effects of an hypothetical tax reform in Romania through a microsimulation analysis.

Keywords: income inequality; inequality of opportunity; tax reforms; microsimulation; progressivity; horizontal equity (search for similar items in EconPapers)
JEL-codes: E6 J1 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2022-09-01
New Economics Papers: this item is included in nep-pbe and nep-tra
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Published in Journal of Economic Inequality, 1, September, 2022, 20(3), pp. 509 - 536. ISSN: 1569-1721

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http://eprints.lse.ac.uk/115534/ Open access version. (application/pdf)

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Journal Article: Income taxation and equity: new dominance criteria with a microsimulation application (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:115534

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