Voting over income taxation

Oriol Carbonell-Nicolau, Efe A. Ok

    Research output: Contribution to journalArticle

    Abstract

    A major problem of the positive theory of income taxation is to explain why statutory income tax schedules in practice are marginal-rate progressive. While it is commonly believed that this is but a simple consequence of the fact that the number of relatively poor voters exceeds that of richer voters in general, putting this contention in a voting equilibrium context is not a trivial task. We do this here in the context of nonlinear taxation and attempt to provide a formal argument in support of this heuristic claim. We first establish the existence of mixed strategy equilibria and identify certain cases in which marginal-rate progressive taxes are chosen almost surely by the political parties. Unfortunately, we also find that if the tax policy space is not artificially constrained, the support of at least one equilibrium cannot be contained within the set of marginal-rate progressive taxes.

    Original languageEnglish (US)
    Pages (from-to)249-286
    Number of pages38
    JournalJournal of Economic Theory
    Volume134
    Issue number1
    DOIs
    StatePublished - May 1 2007

    Keywords

    • Discontinuous games
    • Electoral competition
    • Mixed strategy equilibrium
    • Progressive taxation

    ASJC Scopus subject areas

    • Economics and Econometrics

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  • Cite this

    Carbonell-Nicolau, O., & Ok, E. A. (2007). Voting over income taxation. Journal of Economic Theory, 134(1), 249-286. https://doi.org/10.1016/j.jet.2006.02.008