Tax policy in the presence of emigration |
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Authors: | Jagdish N. Bhagwati Koichi Hamada |
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Affiliation: | Columbia University, New York, NY 10027, USA;Tokyo University, Tokyo 113, Japan |
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Abstract: | This paper investigates the relationship between utilitarianism and horizontal equity in models of income taxation in particular and self-selection in general. An example involving well-behaved individual preferences is constructed in which a maximization of a utilitarian social welfare function leads via income taxation to horizontal inequities. Sufficient conditions for utilitarianism to bring horizontal equity are derived. The results are applied to the question of whether income tax credits are an appropriate way to treat differences in family size. |
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