Utilitarianism and Horizontal Equity: The Case for Random Taxation / Joseph E. Stiglitz.

Format:

Book

Author/Creator:

Stiglitz, Joseph E.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0694.

NBER working paper series no. w0694

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Utilitarianism and Horizontal Equity

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1981.

Summary:

This paper establishes that, far from being able to derive the principle of horizontal equity from utilitarianism, the principle is actually in- consistent with utilitarianism in a variety of circumstances. We derive conditions under which (a) it is optimal to impose random tax schedules (ex post randomization) ; and (b) it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals (ex ante randomization). The implications for optimal tax theory are discussed. More generally, it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with Pareto optimality.

Notes:

Print version record

June 1981.