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Income taxation, uncertaintly and stability

Author

Listed:
  • Francisco Marhuenda Hurtado

    (Universidad Carlos III de Madrid)

  • Ignacio Ortuño Ortín

    (Universidad de Alicante)

Abstract

This paper develops a political model to analyze the stability of income tax schedules. It isassumed that agents perceive any proposed alternative tax policy as more uncertain than thestatus quo. A tax policy is stable if it is a Condorcet winner. It is well known that in a modelwithout uncertainty the existence of such a policy is very rare. We show, however, that in realcases this might not be a serious problem since small amounts of uncertainty can bring stabilityto the status quo. It is also shown that linear tax functions can only be stable in economies withvery egalitarian income distributions and high taxation levels.

Suggested Citation

  • Francisco Marhuenda Hurtado & Ignacio Ortuño Ortín, 1997. "Income taxation, uncertaintly and stability," Working Papers. Serie AD 1997-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1997-07
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    References listed on IDEAS

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    1. Marhuenda, Francisco & Ortuno-Ortin, Ignacio, 1995. "Popular support for progressive taxation," Economics Letters, Elsevier, vol. 48(3-4), pages 319-324, June.
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    Citations

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    Cited by:

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    2. Moreno-Ternero, Juan D., 2011. "Voting over piece-wise linear tax methods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 29-36, January.
    3. Biung-Ghi Ju & Juan D. Moreno-Ternero, 2023. "Taxation behind the veil of ignorance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 165-181, January.
    4. Gustavo Bergantiños & Juan D. Moreno-Ternero, 2023. "Decentralized revenue sharing from broadcasting sports," Public Choice, Springer, vol. 194(1), pages 27-44, January.
    5. Carbonell-Nicolau Oriol, 2009. "A Positive Theory of Income Taxation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-49, July.
    6. Carbonell-Nicolau, Oriol & Klor, Esteban F., 2003. "Representative democracy and marginal rate progressive income taxation," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1137-1164, May.
    7. John Roemer, 2012. "The political economy of income taxation under asymmetric information: the two-type case," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(1), pages 181-199, March.
    8. Jean-Michel Grandmont, 2004. "Fiscally Stable Income Distributions under Majority Voting and Bargaining Sets," Working Papers 2004-18, Center for Research in Economics and Statistics.
    9. Esteban F. Klor, 2003. "On the Popular Support for Progressive Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(4), pages 593-604, October.
    10. Oriol Carbonell-Nicolau & Efe Ok, 2004. "Multidimensional income taxation and electoral competition: an equilibrium analysis," Departmental Working Papers 200407, Rutgers University, Department of Economics.
    11. Carbonell-Nicolau, Oriol & Ok, Efe A., 2007. "Voting over income taxation," Journal of Economic Theory, Elsevier, vol. 134(1), pages 249-286, May.

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