2022
Chapter
Prioritarianism in Practice

Prioritarianism and Optimal Taxation

Format:Print

Abstract

Prioritarianism has been at the center of the formal approach to optimal tax theory since its modern starting point in Mirrlees (1971), but most theorists’ use of it is motivated by tractability rather than explicit normative reasoning. We characterize analytically and numerically the implications of a more explicit use of prioritarianism in optimal tax theory. We also examine prevailing tax policies and surveys on tax preferences to gauge the influence of prioritarianism in practice. We conclude that optimal policy is highly sensitive to many key modeling choices and parameter assumptions, and these choices interact in complicated ways, but that a substantial shift in policy results if the social objective moves from utilitarian to prioritarian. When looking at existing policy and preferences, we find only limited evidence of prioritarian reasoning. We conclude with suggestions on the future of prioritarianism in optimal tax theory.

Keywords

Prioritarianism; Optimal Taxation; Utilitarianism; Redistribution; Inverse-optimum; Taxation; Theory; Policy

Citation

Tuomala, Matti, and Matthew Weinzierl. "Prioritarianism and Optimal Taxation." In Prioritarianism in Practice, edited by Matthew Adler and Ole Norheim. Cambridge University Press, 2022. (Also published in HBR Insights, December 2020.)