Details
On 25th November 2025, we will host Prof. Dr. Casey Rothschild, Norma Wilentz Hess Professor of Economics at Wellesley College, at the University of St. Gallen for a presentation of his latest research paper, «Putting the “re” in redistributive taxation», co-authored with Fatima Djalalova (Blueprint Labs).
Abstract:
We consider a setting in which tax-funded government spending affects productivity. When (and only when) government spending is inherently non redistributive, all Pareto efficient income tax systems feature the same average tax rate. A proportional tax at that rate then provides the nonredistributive benchmark against which the re-distributivity of any other non-linear income tax can be measured. We derive a simple sufficient statistic for that average tax rate. The nonredistributive benchmark may or may not be Pareto efficient. When it is, the social marginal welfare weights that rationalize it are progressive. When it is not, any efficient tax system redistributes towards the wealthy and, among all Pareto efficient tax systems, the one that is closest to the non-redistributive benchmark corresponds to the Rawlsian optimum.