American Economic Review Vol. 85 No. 4 1995
Dalton-Improving Indirect Tax Reform
Abstract
A tax reform is "Dalton-improving" if it improves social welfare for all possible social-welfare functions that conform to Dalton's principle of transfers. According to this principle, there exists a prior social ranking of households, and a transfer is approved if it distributes from high-ranking ("rich") to low-ranking ("poor") households, without altering the ranking itself. In this paper we develop a procedure for identifying marginal Dalton-improving reforms in the context of indirect taxation. The methodology is illustrated using data on excise taxes in the United Kingdom.
- Volume
- 85
- Issue
- 4
- Pages
- 793-807
- Sources
- bibtex:phds-export.bib