Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey
- William Thomson
- Mathematical Social Sciences
This paper explores the relative progressivity of the main bankruptcy rules in taxation problems. A rule F is more progressive than a rule G when the after-tax income vector generated by F Lorenz dominates that generated by G. We focus our analysis on four classical rules (proportional, equal-awards, equal-losses and Talmud) and on the TAL-family, introduced in MorenoTernero & Villar (2002). This family depends on a parameter θ ∈ [0,1] and encompasses the constrained equal awards rule, the constrained equal losses rules and the Talmud rule.