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| Author: | Boadway, R. Marceau, N. Mongrain, S. |
| Title: | Redistributive taxation under ethical behaviour |
| Journal: | Scandinavian Journal of Economics
2007 : VOL. 109:3, p. 505-529 |
| Index terms: | ethics income tax behavioural science tax impact |
| Language: | eng |
| Abstract: | The implications of ethical behaviour on the effect of a redistributive tax-transfer system are investigated in this article. Individuals consider how their tax liabilities correspond to their view of what is ethically acceptable when they decide on their labour supplies. In a situation in which tax liabilities are viewed as ethically acceptable, a taxpayer acts ethically, does not distort her behaviour, and chooses to work as if she were not taxed. On the other hand, if tax liabilities are viewed as exceeding what is ethically acceptable, a taxpayer behaves egoistically, distorts her behaviour, and chooses her labour supply taking into account the income tax. A taxpayers' equilibrium behaviour is identified and it is concluded that labour supply is less elastic when taxpayers may behave ethically than when they act egoistically. The results are compared with a number of benchmark set ups. |
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