Maximizing the lowest welfare position

Abstract

The foregoing chapter dealt with the traditional sacrifice approach to income taxation. It was shown that a modern social choice theoretic basis for its most prominent specification, namely the principle of equal proportional sacrifice, can indeed be provided, and that its consequences can be studied even when the individual labour decision is taken into account. Nevertheless, the fundamental shortcoming of this approach lies in its disregarding of the “distribution purpose”¹⁾ of the state, concentrating only on people’s contributions to general public expenditures.