Talent, equality of opportunity and optimal non-linear income tax

Alain Trannoy

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Abstract: We adopt a philosophical perspective of equality of opportunity and address the issue of whether outcome inequalities are legitimate when they come from differences in talent. We propose a cumulative definition of talent. In a dynamic setting, talent is a by-product of past-effort, current effort and innate talent, which becomes a residual as time goes by. It implies that talent can change from the status of a circumstance when people are young to an almost responsibility variable when people are getting older. We plug this definition of talent into the Mirrlees model of optimal non-linear income tax and we show that the conflict between the principle of compensation and the principle of natural reward boils down to the optimal income tax with Rawlsian weights in the second-best setting.

Keywords: Talent; Effort; Equality of opportunity; Optimal income taxation (search for similar items in EconPapers)
Date: 2019-03
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Citations: View citations in EconPapers (5)

Published in Journal of Economic Inequality, 2019, 17 (1), pp.5-28. ⟨10.1007/s10888-019-09409-7⟩

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Journal Article: Talent, equality of opportunity and optimal non-linear income tax (2019)
Journal Article: Talent, equality of opportunity and optimal non-linear income tax (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02482031

DOI: 10.1007/s10888-019-09409-7

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