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On optimal tax differences between heterogenous groups

Klaus Beckmann, Nele E. Franz () and Andrea Schneider ()
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Nele E. Franz: University of Münster, Postal: Department of Economics, Scharnhorststraße 100, 48151 Münster, Germany

No 144/2014, Working Paper from Helmut Schmidt University, Hamburg

Abstract: This paper considers optimal linear tax structures that are differentiated according to group membership. Groups can be heterogeneous with respect to both preferences and abilities. Contrary to most arguments in favour of tax privileges for certain groups, e.g. gender-based taxation, it is shown that consideration of the first moment of the relevant distributions (the average labour supply elasticity of the groups) is insufficient. We discuss the factors on which efficient differentiation would depend.

Keywords: optimal linear income taxation; preference heterogeneity; gender-based taxation; horizontal equity (search for similar items in EconPapers)
JEL-codes: D31 H21 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-05-15
New Economics Papers: this item is included in nep-pbe and nep-pub
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