TY  - JOUR
AU  - Stiglitz,Joseph E.
TI  - Utilitarianism and Horizontal Equity: The Case for Random Taxation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 694
PY  - 1982
Y2  - November 1982
UR  - http://www.nber.org/papers/w0694
L1  - http://www.nber.org/papers/w0694.pdf
N1  - Author contact info:
Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 212
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - This paper establishes that, far from being able to derive the principle of horizontal equity from utilitarianism, the principle is actually in- consistent with utilitarianism in a variety of circumstances. We derive conditions under which (a) it is optimal to impose random tax schedules (ex post randomization) ; and (b) it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals (ex ante randomization). The implications for optimal tax theory are discussed. More generally, it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with Pareto optimality.
ER  -