Work

Politically Feasible Reforms of Non-Linear Tax Systems

Year: 2020

Type: article

Abstract: We study reforms of nonlinear income tax systems from a political economy perspective. We present a median voter theorem for monotonic tax reforms, reforms so that the change in the tax burden is a monotonic function of income. We also provide an empirical analysis of tax reforms, with a focus on the United States. We show that past reforms have, by and large, been monotonic. We also show that support by the median voter was aligned with majority support in the population. Finally, we develop sufficient statistics that enable to test whether a given tax system admits a politically feasible reform. (JEL D72, H21, H24)

Source: American Economic Review

DOI: 10.2139/ssrn.3021718

Authors: Felix J. Bierbrauer, Pierre C. Boyer, Andreas Peichl

Institutions: University of Cologne, École Polytechnique, Centre de Recherche en Économie et Statistique, Ifo Institute for Economic Research, Ludwig-Maximilians-Universität München

Language: English

Topic: Economic and Fiscal Studies

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

Funders: Deutsche Forschungsgemeinschaft, Agence Nationale de la Recherche, Labex Ecodec