Tax-benefit revealed social preferences

François Bourguignon and Amadéo Spadaro
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Amadéo Spadaro: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UIB - Universitat de les Illes Balears = Universidad de las Islas Baleares = University of the Balearic Islands

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Abstract: This paper inverts the usual logic of applied optimal income taxation. It starts from the observed distribution of income before and after redistribution and corresponding marginal tax rates. Under a set of simplifying assumptions, it is then possible to recover the social welfare function that would make the observed marginal tax rate schedule optimal. In this framework, the issue of the optimality of an existing tax-benefit system is transformed into the issue of the shape of the social welfare function associated with that system and whether it satisfies elementary properties. This method is applied to the French redistribution system with the interesting implication that the French redistribution authority may appear, under some plausible scenario concerning the size of the labor supply behavioral reactions, non Paretian (e.g. giving negative marginal social weights to the richest class of tax payers).

Keywords: Social welfare function; Optimal income tax; Microsimulation; Optimal inverse problem (search for similar items in EconPapers)
Date: 2012-01
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Citations: View citations in EconPapers (51)

Published in Journal of Economic Inequality, 2012, 10 (1), pp.75-108. ⟨10.1007/s10888-010-9153-0⟩

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Related works:
Journal Article: Tax–benefit revealed social preferences (2012)
Working Paper: Tax-benefit revealed social preferences (2012)
Working Paper: Tax-benefit revealed social preferences (2008)
Working Paper: Tax-benefit revealed social preferences (2008)
Working Paper: Tax-benefit revealed social preferences (2008)
Working Paper: Tax-benefit revealed social preferences (2005)
Working Paper: Tax-benefit revealed social preferences (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754607

DOI: 10.1007/s10888-010-9153-0

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