Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90147
Authors: 
Ooghe, Erwin
Peichl, Andreas
Year of Publication: 
2014
Series/Report no.: 
ZEW Discussion Papers 14-002
Abstract: 
We study fair and efficient tax-benefit schemes based on income and non-income factors under partial control. Partial control means that each factor is a specific mixture of unobserved ability (randomly drawn by nature) and effort (chosen by individuals who differ in tastes). Factors differ in the degree of control, ranging from no control (if only ability matters) to full control (if only effort matters). Fairness requires to compensate individuals for differences in well-being caused by differences in abilities, while at the same time preserving well-being differences caused by taste differences. We discuss first the general properties of fair and efficient tax-benefit schemes. Next, we study two special cases income taxation and tagging in detail. Finally, we derive testable conditions for the general case and discuss the empirical implementation.
Subjects: 
fairness
redistribution
taxation
tagging
equality of opportunity
JEL: 
D6
H2
I3
Document Type: 
Working Paper

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