Horizontal Inequity can be a Good Thing

Maria Cubel and Peter Lambert

Discussion Papers from Department of Economics, University of York

Abstract: A switch from any given income tax schedule to a differentiated tax structure in which two groups of taxpayers are treated differently, each still facing the same local degree of progression, can induce an increase in welfare despite causing horizontal inequity. We demonstrate this result in a number of special case and make a general conjecture, the thrust of which is that society's acceptance of horizontal inequity will be second-best whenever the government must operate with a limited bundle of income tax instruments such as allowances, thresholds and marginal rates.

New Economics Papers: this item is included in nep-lab, nep-pbe, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/discussionpapers/1999/9917.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:99/17

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of York Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Paul Hodgson ().