Abstract

http://ssrn.com/abstract=103308
 


 



Winner-Take-All Markets: Easing the Case for Progressive Taxation


Martin J. McMahon Jr.


University of Florida - Levin College of Law

Alice G. Abreu


Temple University - James E. Beasley School of Law


Florida Tax Review, 1998

Abstract:     
In this article Professors McMahon and Abreu examine data on changes in the distribution of income and show that those changes increasingly reflect a winner-take-all pattern in which economic rewards are increasingly skewed toward those at the top 1% of the income distribution. These changes in the distribution of income invite a re-examination of the arguments for progressive taxation, not because they strengthen the case for redistribution, but because they reflect a market in which progressive taxation is more efficient than proportional taxation. By analyzing the data on the distribution of income and constructing a model that reflects that distribution and makes conservative assumptions about the diminishing marginal utility of money, the article shows that the classic equity/efficiency trade-off is the product of an incrementalist distribution of income. The more the distribution of income reflects a winner take-all society, the more efficient progressive taxation becomes. Thus, we no longer have to choose between equity and efficiency because in a society with a winner take-all distribution of income, progressive taxation can give us both.

This project addresses the design of the rate structure only, taking as its starting point a base like the one employed by the current income tax system. Work currently in progress will consider the implications of the shifts in the distribution of income for the definition of the tax base and, specifically, for the taxation of income from capital.

Note: This is a description of the article and not the actual abstract.

JEL Classification: H21, H24, K34

Accepted Paper Series


Not Available For Download

Date posted: August 20, 1998 ; Last revised: September 2, 2009

Suggested Citation

McMahon, Martin J. and Abreu, Alice G., Winner-Take-All Markets: Easing the Case for Progressive Taxation. Florida Tax Review, 1998. Available at SSRN: http://ssrn.com/abstract=103308

Contact Information

Martin James McMahon Jr.
University of Florida - Levin College of Law ( email )
P.O. Box 117625
Gainesville, FL 32611-7625
United States
352-273-0931 (Phone)
352-392-7647 (Fax)
Alice G. Abreu (Contact Author)
Temple University - James E. Beasley School of Law ( email )
1719 N. Broad Street
Philadelphia, PA 19122
United States
215-204-7857 (Phone)
215-204-1185 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,486

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.406 seconds