Why Taxes Need Not Treat Equals Equally

Authors

  • Kristoffer Berg Trinity College, University of Cambridge, United Kingdom

DOI:

https://doi.org/10.23941/ejpe.v17i2.860

Abstract

Horizontal equity is the principle that similarly situated persons should be treated similarly. While the principle is often invoked in tax policy debates, I demonstrate that the principle lacks a firm normative foundation. The paper presents a thought experiment to argue that neither an entitlement to pre-tax income, nor the presence of effort in generating pre-tax income, can provide the necessary foundation for such a principle. Then, I explore whether a concern for equal treatment and avoiding statistical discrimination can support horizontal equity even when there is no entitlement to pre-tax income. I show that tax discrimination can be objectionable, but because discrimination requires a relevant pre-tax benchmark, it follows that non-discrimination cannot support a general principle of horizontal equity without an entitlement to pre-tax income. In conclusion, despite the intuitive appeal of horizontal equity, I argue that its basis as a normative principle in tax policy is weak.

Author Biography

Kristoffer Berg, Trinity College, University of Cambridge, United Kingdom

Kristoffer Berg is a Lecturer and Fellow in Economics at Trinity College, University of Cambridge. His research is focused on issues in taxation, in particular the relationship between fairness principles and tax policy. He is also an Associate Fellow with Oxford University Centre for Business Taxation and Norwegian Fiscal Studies at the University of Oslo. His research papers include Revealing Inequality Aversion from Tax Policy and the Role of Non-Discrimination (Economica 92 (365)) and Problematic Response Margins in the Estimation of the Elasticity of Taxable Income (International Tax and Public Finance 27, 2019)

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Published

2025-01-18

How to Cite

Berg, K. (2025). Why Taxes Need Not Treat Equals Equally. Erasmus Journal for Philosophy and Economics, 17(2), 1–22. https://doi.org/10.23941/ejpe.v17i2.860