Progressive Taxation and the Equal Sacrifice Principle

Young, H.P. (1986). Progressive Taxation and the Equal Sacrifice Principle. IIASA Collaborative Paper. IIASA, Laxenburg, Austria: CP-86-018

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Abstract

A traditional justification for progressive taxation is that it imposes equal sacrifice on all taxpayers in loss of utility. Nevertheless, many plausible utility functions yield strictly regressive taxes when all taxpayers sacrifice equally. If tax rates are required to be progressive, nonnegative, and independent of scale, then there is a unique family of positive, increasing, continuous utility functions that is consistent with equal rate of sacrifice. They determine a unique family of tax schedules that seem not to have been studied before except in isolated cases.

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