On the fair scale of progressive taxation

 
PIIS042473880003317-7-1
DOI10.31857/S042473880003317-7
Publication type Article
Status Published
Authors
Affiliation: Central Economics and Mathematics Institute, Russian Academy of Sciences
Address: Russian Federation, Moscow
Journal nameEkonomika i matematicheskie metody
EditionVolume 54 Issue 4
Pages29-40
Abstract

This article concerns some problems associated with the progressive taxation of personal incomes. The main focus of the paper is the development of progressive tax scale meeting the principle of justice. The taxes are considered fair, if all the taxpayers have been withdrawn the same proportion of utility from their earnings. The utility of money spent for consumption, which is characterized by marginal utility decrease, is meant. This utility is presented in the article by the logarithmic function, which arguments are the ratios of incomes of the citizens to the subsistence level. The particular way of building smooth tax functions satisfying the above formulated rule of fair taxation is proposed. It is proved, that the implementation of such functions requires just progressive taxation. And, after that, a procedure of forming multi-layered scales approximating these smooth tax functions is also presented. A few concrete examples of fair progressive scales are shown. A curious fact is marked that the scale of the progressive income tax adopted in France with good accuracy corresponds to the proposed methodology. In the final part of the article some rules for application of such scales taking into account citizen’s marital status are shortly discussed, as well as some other questions relating to the possible transition from the currently used in Russia flat scale to a progressive scale of taxation of personal incomes.

Keywordstaxpayers, income, subsistence level, utility function, justice, progressive taxation, multi-layered scale
Publication date15.01.2019
Cite   Download pdf To download PDF you should sign in
Размещенный ниже текст является ознакомительной версией и может не соответствовать печатной

views: 537

Readers community rating: votes 0

1. Graborov S.V. (2015). Majority Optimization of Taxes, Transfers, Prices and Wages. Economics and Mathematical Methods, 53, 2, 80–96 (in Russian).

2. Graborov S.V. (2015). Optimization of Budget Incomes and Expenses by Majority Rule. Working Paper # WP/2011/286. Moscow: CEMI RAS (in Russian).

3. Graborov S.V., Pitelin A.K. (2017). Majoritarion Optimality of Direct and Indirect Taxation on Citizens. Economics and Mathematical Methods, 53, 2, 24–39 (in Russian).

4. Persson T., Tabellini G. (2000). Political Economics: Explaining Economic Policy. London: The MIT Press.

5. Rawls J. (1995). A Theory of Justice. Issued by Novosibirsk University (in Russian).

6. Roemer J. (1999). The Democratic Political Economy of Progressive Income Taxation. Econometrica, 67, 1, 1–19.

Система Orphus

Loading...
Up