 The Democratic Political Economy of Progressive Income TaxationNo 97-03, Discussion Papers from University of Copenhagen. Department of Economics Abstract: Why do both left and right political parties almost always propose progressive income taxation schemes in political competition? Analysis of this problem has been hindered by the two-dimensionality of the issue space. To give parties a choice over a domain which contains both progressive and regressive policies requires an issue space that is at least two-dimensional. Nash equilibrium between two parties with (complete) preferences over two-dimensional policies fails to exist. The author introduces a new equilibrium concept for political games, based on inner-party struggle. A party consists of three factions, reformists, militants, and opportunists: each faction has a complete preference order on policy space, but together they can only agree on a partial order. Inner-party unity equilibrium is defined as Nash equilibrium between two parties, each of which maximizes with respect to its quasi-order. Such equilibria exist in the two-dimensional model and in them, both parties propose progressive income taxation. Keywords: progressive taxation; spatial model (search for similar items in EconPapers) Published in: Econometrica 67(1) 1999, 1-19 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:9703 Access Statistics for this paper More papers in Discussion Papers from University of Copenhagen. Department of Economics Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC. |
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