Taxation behind the veil of ignorance

Biung-Ghi Ju () and Juan Moreno-Ternero
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Biung-Ghi Ju: Department of Economics, Seoul National University

No 21.10, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: We explore the design of impartial tax schemes in a simple setup where agents’ incomes are completely determined by their inborn talents. Building on Harsanyi’s veil-of-ignorance approach, we conceptualize an impartial observer who chooses a tax scheme without know- ing her own preferences and the distribution of talents, and whose vNM preferences behind the veil obey Harsanyi’s principle of acceptance and are independent, in terms of utility-scale, of the distribution of talents. Our results in the resulting framework provide three main messages: (i) the veil of ignorance implies anonymity of tax schemes; (ii) the veil of ignorance generically rejects utilitarian tax schemes; (iii) the veil of ignorance endorses the (Rawlsian) leveling tax scheme.

Keywords: veil of ignorance; impartiality; anonymity; leveling tax; utilitarianism (search for similar items in EconPapers)
JEL-codes: D63 D71 H24 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2021
New Economics Papers: this item is included in nep-mic, nep-pub and nep-upt
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Citations: View citations in EconPapers (1)

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Journal Article: Taxation behind the veil of ignorance (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:21.10

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