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Lump-sum over Distortionary Taxation Dominance with Heterogeneous Individuals

Author

Listed:
  • Ramon J. Torregrosa-Montaner

    (Universidad de Salamanca)

Abstract

The dominance of lump-sum over distortionary taxation for the single consumer case is a well-known proposition in microeconomics. This result implies that if the consumer is asked about what tax she would pay to bear a given tax burden, she would choose lump-sum taxation. This paper provides a version of this dominance of lump-sum taxation for the case of several heterogeneous individuals by means of a game where the government allows each individual to choose between the two tax regimes.

Suggested Citation

  • Ramon J. Torregrosa-Montaner, 2015. "Lump-sum over Distortionary Taxation Dominance with Heterogeneous Individuals," Economics Bulletin, AccessEcon, vol. 35(3), pages 1443-1449.
    • Handle: RePEc:ebl:ecbull:eb-15-00373
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    References listed on IDEAS

    as
    1. Fullerton, Don, 1982. "On the possibility of an inverse relationship between tax rates and government revenues," Journal of Public Economics, Elsevier, vol. 19(1), pages 3-22, October.
    2. M. F. W. Joseph, 1939. "The Excess Burden of Indirect Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 6(3), pages 226-231.
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    More about this item

    Keywords

    Lump-sum taxation; distortionary taxation; pure strategy Nash equilibrium.;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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