Fair Redistribution of Performance-Based Allocations: A Case for Proportional Taxation
HHL Working Paper 134
11 Pages Posted: 22 Mar 2014
Date Written: March 16, 2014
Abstract
Within a simple setup, we show that fair redistribution of performance-based allocations implies proportional taxation. Fair redistribution is characterized by three properties: efficiency, i.e., redistribution has no cost. Anonymity, i.e., rewards after redistribution do not depend on the identity of the members of the society but only on their performance. Weak monotonicity, i.e., whenever both the performance of a certain member of the society as well as the overall performance of the society increase, then this member's reward after redistribution does not decrease.
Keywords: Solidarity, redistribution, proportional taxation, efficiency, anonymity, weak monotonicity
JEL Classification: D63, H20
Suggested Citation: Suggested Citation