Should Egalitarians Expropriate Philanthropists?
Durham University - Department of Economics and Finance; Institute for the Study of Labor (IZA)
Cornell University - School of Applied Economics and Management; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
CEPR Discussion Paper No. DP6362
Wealthy individuals often voluntarily provide public goods that the poor also consume. Such philanthropy is perceived as legitimizing one's wealth. Governments routinely exempt the rich from taxation on grounds of their charitable expenditure. We examine the normative logic of this exemption. We show that, rather than reducing it, philanthropy may aggravate absolute inequality in welfare achievement, while leaving the change in relative inequality ambiguous. Additionally, philanthropic preferences may increase the effectiveness of policies to redistribute income, instead of weakening them. Consequently, the general normative case for exempting the wealthy from expropriation, on grounds of their public goods contributions, appears dubious.
Number of Pages in PDF File: 18
Keywords: Community, Distribution, Egalitarianism, Inequality, Philanthropy, Public goods
JEL Classification: D31, D63, D74, Z13working papers series
Date posted: May 23, 2008
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