IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v13y2021i2p276-310.html
   My bibliography  Save this article

Well-Being, Poverty, and Labor Income Taxation: Theory and Application to Europe and the United States

Author

Listed:
  • François Maniquet
  • Dirk Neumann

Abstract

In a model where agents differ in wages and preferences over labor time–consumption bundles, we study labor income tax schemes that alleviate poverty. To avoid conflict with individual well-being, we require redistribution to take place between agents on both sides of the poverty line provided they have the same labor time. This requirement is combined with efficiency and robustness properties. Maximizing the resulting social preferences under incentive compatibility constraints yields the following evaluation criterion: tax schemes should minimize the labor time required to reach the poverty line. We apply this criterion to European countries and the United States.

Suggested Citation

  • François Maniquet & Dirk Neumann, 2021. "Well-Being, Poverty, and Labor Income Taxation: Theory and Application to Europe and the United States," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 276-310, May.
    • Handle: RePEc:aea:aejmic:v:13:y:2021:i:2:p:276-310
    DOI: 10.1257/mic.20180269
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mic.20180269
    Download Restriction: no
    File URL: https://doi.org/10.3886/E118721V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/mic.20180269.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/mic.20180269.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/mic.20180269?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Boadway, Robin, 2012. "From Optimal Tax Theory to Tax Policy: Retrospective and Prospective Views," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262017113, April.
    2. Emmanuel Saez & Stefanie Stantcheva, 2016. "Generalized Social Marginal Welfare Weights for Optimal Tax Theory," American Economic Review, American Economic Association, vol. 106(1), pages 24-45, January.
    3. Bruce D. Meyer & James X. Sullivan, 2012. "Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 111-136, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Domenico Moramarco & Bram De Rock, 2022. "Nonparametric analysis of heterogeneous multidimensional fairness," Working Papers 621, ECINEQ, Society for the Study of Economic Inequality.
    2. Germain, Antoine, 2023. "Basic income versus fairness: redistribution with inactive agents," LIDAM Discussion Papers CORE 2023022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maitreesh Ghatak & François Maniquet, 2019. "Universal Basic Income: Some Theoretical Aspects," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 895-928, August.
    2. Robert Scherf & Matthew Weinzierl, 2020. "Understanding Different Approaches to Benefit‐Based Taxation," Fiscal Studies, John Wiley & Sons, vol. 41(2), pages 385-410, June.
    3. Matthew Weinzierl, 2018. "Revisiting the Classical View of Benefit‐based Taxation," Economic Journal, Royal Economic Society, vol. 128(612), pages 37-64, July.
    4. Fleurbaey, Marc & Maniquet, François, 2015. "Optimal taxation theory and principles of fairness," LIDAM Discussion Papers CORE 2015005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Thomas Piketty & Emmanuel Saez, 2012. "Optimal Labor Income Taxation," NBER Working Papers 18521, National Bureau of Economic Research, Inc.
    6. Erwin Ooghe & Erik Schokkaert & Hannes Serruys, 2023. "Fair Earnings Tax Reforms," CESifo Working Paper Series 10242, CESifo.
    7. Henry de Frahan, Lancelot & Maniquet, François, 2021. "Preference responsibility versus poverty reduction in the taxation of labor incomes," Journal of Public Economics, Elsevier, vol. 197(C).
    8. Boadway,Robin & Cuff,Katherine, 2022. "Tax Policy," Cambridge Books, Cambridge University Press, number 9781108949453, October.
    9. Aleksandra Kolasa & Ewa Weychert, 2024. "The causal effect of catastrophic health expenditure on poverty in Poland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 25(2), pages 193-206, March.
    10. Laurence Jacquet & Etienne Lehmann, 2015. "Optimal Income Taxation when Skills and Behavioral Elasticities are Heterogeneous," CESifo Working Paper Series 5265, CESifo.
    11. Nicholas Chesterley, 2017. "Defaults, Decision Costs and Welfare in Behavioural Policy Design," Economica, London School of Economics and Political Science, vol. 84(333), pages 16-33, January.
    12. Juan Carlos Suárez Serrato & Owen Zidar, 2016. "Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 106(9), pages 2582-2624, September.
    13. Kasy, Maximilian, 2018. "Optimal taxation and insurance using machine learning — Sufficient statistics and beyond," Journal of Public Economics, Elsevier, vol. 167(C), pages 205-219.
    14. Ashantha Ranasinghe & Xuejuan Su, 2023. "When social assistance meets market power: A mixed duopoly view of health insurance in the United States," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 851-869, October.
    15. Landry, Joel R., 2021. "The political allocation of green pork and its implications for federal climate policy," Journal of Public Economics, Elsevier, vol. 201(C).
    16. Bachas, Pierre & Gadenne, Lucie & Jensen, Anders, 2020. "Informality, Consumption Taxes and Redistribution," The Warwick Economics Research Paper Series (TWERPS) 1277, University of Warwick, Department of Economics.
    17. Stefanie Stantcheva, 2020. "Dynamic Taxation," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 801-831, August.
    18. Alexander I. Pogorletskiy, 2017. "Tax policy in the contemporary world: peculiarities and prospects, implementation in Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(1), pages 29-42.
    19. Stéphane Gauthier & Fanny Henriet, 2018. "A Fuel Tax Decomposition When Local Pollution Matters," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01826330, HAL.
    20. Erwin Ooghe & Andreas Peichl, 2015. "Fair and Efficient Taxation under Partial Control," Economic Journal, Royal Economic Society, vol. 125(589), pages 2024-2051, December.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:13:y:2021:i:2:p:276-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.