Re-distributive Taxation Under Ethical Behavior

25 Pages Posted: 20 Nov 2007

See all articles by Robin Boadway

Robin Boadway

Queen's University; CESifo (Center for Economic Studies and Ifo Institute); Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Nicolas Marceau

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Steeve Mongrain

Simon Fraser University (SFU) - Department of Economics

Abstract

We consider the implications of ethical behavior on the effect of a re-distributive tax-transfer system. In choosing their labor supplies, individuals take into account whether their tax liabilities correspond to what they view as ethically acceptable. If tax liabilities are viewed as ethically acceptable, a taxpayer behaves ethically, does not distort her behavior, and chooses to work as if she were not taxed. On the other hand, if ethical behavior results in tax liabilities that exceed those that are ethically acceptable, she behaves egoistically (partially or fully), distorts her behavior, and chooses her labor supply taking into account the income tax. We establish taxpayers' equilibrium behavior and obtain that labor supply is less elastic when taxpayers may behave ethically than when they act egoistically. We characterize and compare the egoistic voting equilibrium linear tax schedules under potentially ethical and egoistic behavior. We also compare our results to those obtained under altruism, an alternative benchmark.

Suggested Citation

Boadway, Robin and Marceau, Nicolas and Mongrain, Steeve, Re-distributive Taxation Under Ethical Behavior. Scandinavian Journal of Economics, Vol. 109, No. 3, pp. 505-529, September 2007. Available at SSRN: https://ssrn.com/abstract=1031536 or http://dx.doi.org/10.1111/j.1467-9442.2007.00503.x

Robin Boadway (Contact Author)

Queen's University ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada
613-533-2266 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://qed.econ.queensu.ca/pub/faculty/boadway/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Ste-Foy, Quebec G1K 7P4
Canada

Nicolas Marceau

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE) ( email )

Ste-Foy, Quebec G1K 7P4
Canada

Steeve Mongrain

Simon Fraser University (SFU) - Department of Economics ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada
604-291-3547 (Phone)
604-291-5944 (Fax)

HOME PAGE: http://www.sfu.ca/~mongrain/

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