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Redistributive Taxation Under Ethical Behaviour

Robin Boadway (), Nicolas Marceau () and Steeve Mongrain ()

Cahiers de recherche from CIRPEE

Abstract: We consider the implications of ethical behaviour on the effect of a redistributive tax-transfer system. In choosing their labour supplies, individuals take into account whether their tax liabilities correspond to what they view as ethically acceptable. If tax liabilities are viewed as ethically acceptable, a taxpayer behaves ethically, does not distort her behaviour, and chooses to work as if she were not taxed. On the other hand, if ethical behaviour results in tax liabilities that exceed those that are ethically acceptable, she behaves egoistically (partially or fully), distorts her behaviour, and chooses her labour supply taking into account the income tax. We establish taxpayers' equilibrium behaviour and obtain that labour supply is less elastic when taxpayers may behave ethically than when they act egoistically. We characterize and compare the egoistic voting equilibrium linear tax schedules under potentially ethical and egoistic behaviour. We also compare our results to those obtained under altruism, an alternative benchmark.

Keywords: Ethical behaviour; Kantian preferences; income taxation; redistribution (search for similar items in EconPapers)
JEL-codes: H24 H21 Z13 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-pbe and nep-pub
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Journal Article: Redistributive Taxation under Ethical Behaviour* (2007) Downloads
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