TITLE:
Properties of Non-Differentiable Tax Policies
AUTHORS:
Johan Fellman
KEYWORDS:
Gini Indices; Income Inequality; Income Redistributive Policies; Lorenz Curves; Lorenz Dominance
JOURNAL NAME:
Theoretical Economics Letters,
Vol.3 No.3,
June
7,
2013
ABSTRACT:
In this
study, we reconsider the effect of variable transformations on the
redistribution of income. We assume that the density function is continuous. If
the theorems should hold for all income distributions, the conditions earlier
given are both necessary and sufficient. Different conditions are compared. One
main result is that continuity is a necessary condition if one demands that the
income inequality should remain or be reduced. In our previous studies, of tax
policies the assumption was that the transformations were differentiable and
satisfy a derivative condition. In this study, we show that it is possible to
reduce this assumption to a continuity condition.