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Income inequality, utility, and optimal income taxation

Author

Listed:
  • Kemper W. Moreland

    (Eastern Michigan University)

Abstract

Income inequality has increasingly become a concern for politicians, voters, and economists. Lively debates arise on how the tax and welfare system can reduce this income inequality. Economists studying optimal income tax design, however, search for the properties of a tax system that maximizes a social welfare function dependent upon individuals' utilities. This study analyzes policy differences and the social cost resulting from policymakers searching to reduce income inequality rather than utility inequality.

Suggested Citation

  • Kemper W. Moreland, 2019. "Income inequality, utility, and optimal income taxation," Economics Bulletin, AccessEcon, vol. 39(1), pages 656-661.
    • Handle: RePEc:ebl:ecbull:eb-18-00773
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I1-P66.pdf
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    References listed on IDEAS

    as
    1. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    2. Hang Keun Ryu & Daniel J. Slottje, 2017. "Income inequality versus utility inequality," Communications in Statistics - Theory and Methods, Taylor & Francis Journals, vol. 46(8), pages 3631-3640, April.
    3. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    4. Tuomala, Matti, 2016. "Optimal Redistributive Taxation," OUP Catalogue, Oxford University Press, number 9780198753414.
    5. Kemper Moreland, 2004. "The rise or fall of graduated income tax rates," Applied Economics Letters, Taylor & Francis Journals, vol. 11(4), pages 227-229.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    income inequality; welfare; optimal income tax;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D6 - Microeconomics - - Welfare Economics

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