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Redistribution, taxes, and the median voter

Author

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  • Marco Bassetto
  • Jess Benhabib
Abstract
We study a simple model of production, accumulation, and redistribution, where agents are heterogeneous in their initial wealth, and a sequence of redistributive tax rates is voted upon. Though the policy is infinite-dimensional, we prove that a median voter theorem holds if households have identical, Gorman aggregable preferences; furthermore, the tax policy preferred by the median voter has the ?bang- bang? property.

Suggested Citation

  • Marco Bassetto & Jess Benhabib, 2006. "Redistribution, taxes, and the median voter," Working Paper Series WP-06-02, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-06-02
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    References listed on IDEAS

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    More about this item

    Keywords

    Taxation; Wealth;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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