Template-type: ReDif-Paper 1.0
Author-Name: Herings P. Jean-Jacques 
Author-Name: Predtetchinski Arkadi 
Author-workplace-name: METEOR
Title: Procedurally Fair Taxation
Abstract: We study the implications of procedural fairness on income taxation. We formulateprocedural fairness as a particular non-cooperative bargaining game and examine thestationary subgame perfect equilibria of the game. The equilibrium outcome is called tax equilibrium and is shown to be unique. The procedurally fair tax rate is defined as the tax rate that results in the limit of tax equilibria when the probability that negotiations break down converges to zero. The procedurally fair tax rate is shown to be unique. We also provide a characterization of the procedurally fair tax rate that involves the probability mass of below average income citizens and a particular measure of the citizens'' boldness. This characterization is then used to show that in a number of interesting cases the procedurally fair tax rate equals the probability mass of below average income citizens.
Keywords: public economics ; 
Series: Research Memoranda
Creation-Date: 2011
Number: 024
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:e59fd159-fbfe-456b-bd21-dcb4496e4032/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 435205
Handle: RePEc:unm:umamet:2011024