Bierbrauer, Felix J. (University of Cologne)
Boyer, Pierre C. (École Polytechnique)
Peichl, Andreas (LMU Munich & ifo Institute)
We study reforms of non-linear income tax systems from a political economy perspective. We present a median voter theorem for monotonic tax reforms, reforms so that the change in the tax burden is a monotonic function of income. We also provide an empirical analysis of tax reforms, with a focus on the US. We show that past reforms have, by and large, been monotonic. We also show that support by the median voter was aligned with majority support in the population. Finally, we develop sufficient statistics that enable to test whether a given tax system admits a politically feasible reform.
non-linear income taxation; tax reforms; political economy; optimal taxation
C72; D72; D82; H21