TY - JOUR
T1 - Optimal income taxation theory and principles of fairness
AU - Fleurbaey, Marc
AU - Maniquet, François
N1 - Funding Information:
*Fleurbaey: Princeton University. Maniquet: CORE, Université catholique de Louvain. This paper has benefited from conversations with R. Boadway, S. Coate, E. Saez, and S. Stantcheva, from reactions of participants at the Taxation Theory Conference (Cologne 2014) and the QMUL conference in honor of John Roemer, and comments and suggestions by P. Pestieau, six referees, and the Editor, Steven Durlauf. François Maniquet’s work was supported by the European Research Council under the European Union’s Seventh Framework Programme (FP7/2007-2013)/ ERC n° 269831.
Publisher Copyright:
© American Economic Association. All rights reserved.
PY - 2018/9
Y1 - 2018/9
N2 - The achievements and limitations of the classical theory of optimal labor-income taxation based on social welfare functions are now well known. Even though utilitarianism still dominates public economics, recent interest has arisen for broadening the normative approach and making room for fairness principles such as desert or responsibility. Fairness principles sometimes provide immediate recommendations about the relative weights to assign to various income ranges, but in general require a careful choice of utility representations embodying the relevant interpersonal comparisons. The main message of this paper is that the traditional tool of welfare economics, the social welfare function framework, is flexible enough to incorporate many approaches, from egalitarianism to libertarianism.
AB - The achievements and limitations of the classical theory of optimal labor-income taxation based on social welfare functions are now well known. Even though utilitarianism still dominates public economics, recent interest has arisen for broadening the normative approach and making room for fairness principles such as desert or responsibility. Fairness principles sometimes provide immediate recommendations about the relative weights to assign to various income ranges, but in general require a careful choice of utility representations embodying the relevant interpersonal comparisons. The main message of this paper is that the traditional tool of welfare economics, the social welfare function framework, is flexible enough to incorporate many approaches, from egalitarianism to libertarianism.
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U2 - 10.1257/jel.20171238
DO - 10.1257/jel.20171238
M3 - Review article
AN - SCOPUS:85054126672
SN - 0022-0515
VL - 56
SP - 1029
EP - 1079
JO - Journal of Economic Literature
JF - Journal of Economic Literature
IS - 3
ER -