Income taxation, uncertaintly and stability

Francisco Marhuenda () and Ignacio Ortuño Ortín
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Ignacio Ortuño Ortín: Universidad de Alicante

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper develops a political model to analyze the stability of income tax schedules. It isassumed that agents perceive any proposed alternative tax policy as more uncertain than thestatus quo. A tax policy is stable if it is a Condorcet winner. It is well known that in a modelwithout uncertainty the existence of such a policy is very rare. We show, however, that in realcases this might not be a serious problem since small amounts of uncertainty can bring stabilityto the status quo. It is also shown that linear tax functions can only be stable in economies withvery egalitarian income distributions and high taxation levels.

Keywords: Majority voting; income taxation; uncertainty (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997-03
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http://www.ivie.es/downloads/docs/wpasad/wpasad-1997-07.pdf Fisrt version / Primera version, 1997 (application/pdf)

Related works:
Journal Article: Income taxation, uncertainty and stability (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1997-07

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