American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Politically Feasible Reforms of Nonlinear Tax Systems
American Economic Review
vol. 111,
no. 1, January 2021
(pp. 153–91)
Abstract
We study reforms of nonlinear 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 United States. 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.Citation
Bierbrauer, Felix J., Pierre C. Boyer, and Andreas Peichl. 2021. "Politically Feasible Reforms of Nonlinear Tax Systems." American Economic Review, 111 (1): 153–91. DOI: 10.1257/aer.20190021Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes