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THE EQUAL ABSOLUTE SACRIFICE PRINCIPLE REVISITED
Author(s) -
Lambert Peter J.,
Naughton Helen T.
Publication year - 2009
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.2008.00564.x
Subject(s) - sacrifice , economics , equity (law) , rank (graph theory) , equating , position (finance) , welfare , econometrics , work (physics) , income distribution , distribution (mathematics) , microeconomics , public economics , mathematical economics , inequality , mathematics , statistics , law , combinatorics , political science , market economy , mechanical engineering , mathematical analysis , archaeology , finance , rasch model , history , engineering
We summarize the literature on equal absolute sacrifice income taxes, and make some extensions. We adapt the utilitarian equal sacrifice criterion to a wide class of rank‐dependent social welfare functions, and find that liabilities depend on both income and position in the distribution. We investigate whether such taxes need be progressive, using a combination of analytics and simulation, and in the process uncover tax functions not previously recognized as equating sacrifices. Finally, out of horizontal equity considerations a new concept of ‘the equal treatment of equals’ by an income tax emerges, with implications for future work whose significance is discussed.