Reforming a complicated income tax system: The political economics perspective

Salvatore Barbaro () and Jens Südekum ()
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Jens Südekum: Department of Economics, University of Konstanz
Authors registered in the RePEc Author Service: Jens Suedekum

No 120, Departmental Discussion Papers from University of Goettingen, Department of Economics

Abstract: In this paper we analyze the political economics of different strategies to implement revenue neutral reforms of a complicated income tax system (�tax-cut-cum-base-broadening�). We set up a straightforward social choice model where individuals initially have two deduction possibilities from the tax base. The government wants to cut back the tax base exemptions and it can do so symmetrically or asymmetrically. Asymmetrical approaches face the difficulty that even such individuals can vote against an isolated cut (or an abolishment) of a single tax concession who benefit below average from it. In some constellations a symmetrical cut is in fact the only politically feasible option, whereas all asymmetrical reforms would not be supported by the public.

Keywords: income tax reform; public choice (search for similar items in EconPapers)
JEL-codes: D72 D74 (search for similar items in EconPapers)
Pages: 13
Date: 2004-01-01
New Economics Papers: this item is included in nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:got:vwldps:120

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