The Democratic Political Economy of Progressive Income Taxation

UC Davis Working Paper #97-11

Posted: 15 Apr 1997

See all articles by John E. Roemer

John E. Roemer

Yale University - Department of Political Science; Yale University - Cowles Foundation

Date Written: March 1997

Abstract

Why do both left and right political parties almost always propose progressive income taxation schemes in political competition? Analysis of this problem has been hindered by the two-dimensionality of the issue space. To give parties a choice over a domain which contains both progressive and regressive policies requires an issue space that is at least two-dimensional. Nash equilibrium between two parties with (complete) preferences over two-dimensional policies fails to exist. I introduce a new equilibrium concept for political games, based on inner-party struggle. A party consists of three factions--reformists, militants, and opportunists: each faction has a complete preference order on policy space, but together they can only agree on a partial order. Inner-party unity equilibrium is defined as Nash equilibrium between two parties, each of which maximizes with respect to its quasi- order. Such equilibria exist in the two-dimensional model, and in them both parties propose progressive income taxation.

JEL Classification: D72, H20

Suggested Citation

Roemer, John E., The Democratic Political Economy of Progressive Income Taxation (March 1997). UC Davis Working Paper #97-11. Available at SSRN: https://ssrn.com/abstract=4823

John E. Roemer (Contact Author)

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States
203-432-5249 (Phone)
203-432-6196 (Fax)

HOME PAGE: http://pantheon.yale.edu/~jer39/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
544
PlumX Metrics