Optimal Inequality Behind the Veil of Ignorance

Liang, Che-Yuan

doi:10.2139/ssrn.2427670

Cited by 3 publications

(2 citation statements)

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“…2 For related uses of IP theory, see (e.g., Levi 1977;Gajdos and Kandil 2008). Debates about appropriate epistemic states (e.g., Buchak 2017;Stefánsson 2019) and decision-theoretic principles (e.g., Kurtulmuş 2012;Liang 2017;Gustafsson 2018) behind the veil remain active. Stefánsson (2019), for example, considers ambiguity averse preferences behind the veil, and finds such preferences support a form of egalitarianism.…”

Section: Introductionmentioning

confidence: 99%

“…Stefánsson (2019), for example, considers ambiguity averse preferences behind the veil, and finds such preferences support a form of egalitarianism. Liang (2017), to take another example, employs cumulative prospect theory and finds an optimal form of inequality. In contrast, the present paper considers a range of (purportedly normative) IP choice rules, focuses on Lerner's theorem rather than Rawls's theory, makes no central appeal to objective probabilities, and seems to reach relatively more equivocal conclusions about the extent to which a form of egalitarianism is or is not vindicated.…”

Section: Introductionmentioning

confidence: 99%

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Uncertainty, equality, fraternity

Stewart

2021

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Epistemic states of uncertainty play important roles in ethical and political theorizing. Theories that appeal to a “veil of ignorance,” for example, analyze fairness or impartiality in terms of certain states of ignorance. It is important, then, to scrutinize proposed conceptions of ignorance and explore promising alternatives in such contexts. Here, I study Lerner’s probabilistic egalitarian theorem in the setting of imprecise probabilities. Lerner’s theorem assumes that a social planner tasked with distributing income to individuals in a population is “completely ignorant” about which utility functions belong to which individuals. Lerner models this ignorance with a certain uniform probability distribution, and shows that, under certain further assumptions, income should be equally distributed. Much of the criticism of the relevance of Lerner’s result centers on the representation of ignorance involved. Imprecise probabilities provide a general framework for reasoning about various forms of uncertainty including, in particular, ignorance. To what extent can Lerner’s conclusion be maintained in this setting?

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Uncertainty, equality, fraternity

Stewart

2021

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Dividend Taxation and the Cost of New Share Issues

Lindhe¹,

Södersten²

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper examines how the effects of dividend taxation on the cost of new equity funds depend on whether or not shareholders can recover their original equity injections without being subject to the dividend tax. We point out the alternative assumptions in the literature on this, and we compare two different tax regimes, one where it is impossible for the firm to pay cash to its shareholders that is not taxed as dividends, the other where the shareholders are allowed a tax-free return of the original capital contributed through new issues. We conclude that any model, which explicitly or implicitly assumes that the shareholders cannot recover their original equity injections without being subject to the dividend tax, exaggerates the distortive effects of the tax. Terms of use: Documents in EconStor mayJEL-Code: H240, H250, H320.

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Individual Heterogeneity, Nonlinear Budget Sets, and Taxable Income

et al. 2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Many studies have estimated the effect of taxes on taxable income. To account for nonlinear taxes these studies either use instrumental variables approaches that are not fully consistent, or impose strong functional form assumptions. None allow for general heterogeneity in preferences. In this paper we derive the expected value and distribution of taxable income, conditional on a nonlinear budget set, allowing general heterogeneity and optimization error in taxable income. We find an important dimension reduction and use that to develop nonparametric estimation methods. We show how to nonparametrically estimate the expected value of taxable income imposing all the restrictions of utility maximization and allowing for measurement errors. We characterize what can be learned nonparametrically from kinks about compensated tax effects. We apply our results to Swedish data and estimate for prime age males a significant net of tax elasticity of 0.21 and a significant nonlabor income effect of about -1. The income effect is substantially larger in magnitude than found in other taxable income studies. Terms of use: Documents inJEL-Code: C140, C240, H300, H310, J220.

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Optimal Inequality Behind the Veil of Ignorance

Cited by 3 publications

References 18 publications

Uncertainty, equality, fraternity

Uncertainty, equality, fraternity

Dividend Taxation and the Cost of New Share Issues

Individual Heterogeneity, Nonlinear Budget Sets, and Taxable Income

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