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Canons of Just Taxation: Efficiency and Fairness in an Economy with a Public Good

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  • Dennis Sullivan
  • Harris Schlesinger

Abstract

This article analyzes the relationships among three canons of “just†taxation: Pareto optimality, individual rationality, and fairness (nonenvy). Using a helpful device called a Kolm triangle, the analysis shows that the fair and Pareto optimal point need not be individually rational, that it will involve progressive taxation, and that it bears no particular relationship to Lindahl equilibrium, but a rather close relationship to Rawlsian justice.

Suggested Citation

  • Dennis Sullivan & Harris Schlesinger, 1986. "Canons of Just Taxation: Efficiency and Fairness in an Economy with a Public Good," Public Finance Review, , vol. 14(4), pages 448-465, October.
    • Handle: RePEc:sae:pubfin:v:14:y:1986:i:4:p:448-465
    DOI: 10.1177/109114218601400405
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    References listed on IDEAS

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    1. Varian, Hal R., 1976. "Two problems in the theory of fairness," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 249-260.
    2. Jeremias, Ronald & Zardkoohi, Asghar, 1976. "Distributional Implications of Independent Adjustments in an Economy with Public Goods," Economic Inquiry, Western Economic Association International, vol. 14(2), pages 305-308, June.
    3. Pazner, Elisha A. & Schmeidler, David, 1976. "Social contract theory and ordinal distributive equity," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 261-268.
    4. Holcombe, Randall G, 1983. "Applied Fairness Theory: Comment," American Economic Review, American Economic Association, vol. 73(5), pages 1153-1156, December.
    5. Shibata, Hirofumi, 1971. "A Bargaining Model of the Pure Theory of Public Expenditure," Journal of Political Economy, University of Chicago Press, vol. 79(1), pages 1-29, Jan.-Feb..
    6. Philpotts, Geoffrey, 1983. "Applied Fairness Theory: Comment," American Economic Review, American Economic Association, vol. 73(5), pages 1157-1160, December.
    7. Baumol, William J, 1982. "Applied Fairness Theory and Rationing Policy," American Economic Review, American Economic Association, vol. 72(4), pages 639-651, September.
    8. E. Malinvaud, 1971. "A Planning Approach to the Public Good Problem," Palgrave Macmillan Books, in: Peter Bohm & Allen V. Kneese (ed.), The Economics of Environment, pages 77-93, Palgrave Macmillan.
    9. Knut Wicksell, 1958. "A New Principle of Just Taxation," International Economic Association Series, in: Richard A. Musgrave & Alan T. Peacock (ed.), Classics in the Theory of Public Finance, pages 72-118, Palgrave Macmillan.
    10. Roberts, Donald John, 1974. "The Lindahl solution for economies with public goods," Journal of Public Economics, Elsevier, vol. 3(1), pages 23-42, February.
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    Cited by:

    1. Eduardo Ley, 1996. "On the private provision of public goods: a diagrammatic exposition," Investigaciones Economicas, Fundación SEPI, vol. 20(1), pages 105-123, January.
    2. Wolfgang Buchholz & Wolfgang Peters, 2008. "Equal sacrifice and fair burden-sharing in a public goods economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 415-429, August.

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