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The politics of progressive income taxation with incentive effects

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  • De Donder, Philippe
  • Hindriks, Jean

Abstract

This paper studies majority voting over non-linear income taxes when individuals respnd to taxation by substituting untaxable leisure to taxable labor. We first show that voting cycles over progressive and regressive taxes is inevitable. We then investigate three solution to this cycling problem: (i)rducing the policy space to the policies that are ideal for some voter; (ii) weakening the voting equilibrium concept; (iii) assuming parties also care about the size of their majority.
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  • De Donder, Philippe & Hindriks, Jean, 2003. "The politics of progressive income taxation with incentive effects," Journal of Public Economics, Elsevier, vol. 87(11), pages 2491-2505, October.
    • Handle: RePEc:eee:pubeco:v:87:y:2003:i:11:p:2491-2505
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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