Tax-benefit revealed social preferences

François Bourguignon and Amedeo Spadaro ()

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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 either has a rather low estimate of the labor supply elasticity or does not give positive social weights to the richest tax payers.

Keywords: social welfare function; optimal income tax; microsimulation; optimal inverse problem (search for similar items in EconPapers)
Date: 2005-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590779v1
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Citations: View citations in EconPapers (25)

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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 (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)
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