Erwin Ooghe – Fairness gaps for earnings tax design
Erwin Ooghe (KUleuven) – Fairness gaps for earnings tax design
Room : P61
Abstract:
In a setting with skill and preference heterogeneity, we characterize a family of social welfare measures that aggregate fairness gaps, defined as the difference between the money-metric utilities that individuals have and the money-metric utilities they should have in a
fair society. Each welfare measure can be decomposed into government revenues (size), excess burden (inefficiency), and unfair inequality (inequity). As a proof of concept, we evaluate four hypothetical earnings tax reforms based on two normative parameters: the degree of unfairness aversion and the degree of compensation for productive skills.