Public Economics in Action: The Basic Income/Flat Tax Proposal

By A. B. Atkinson | Go to book overview
Save to active project

3 Optimum Taxation, Differentiation, and Graduation

3.1 Introduction

This chapter elaborates on certain aspects of the optimum income tax and the design of benefits. In Chapter 2, we examined the Basic Income/Flat Tax (BI/FT) proposal, looking at the choice between different levels of basic income and associated rates of tax, given that such a scheme was in force. The next important question concerns the choice between the BI/FT and the Social Insurance/Graduated Tax (SI/GT) arrangements found in most OECD countries. Here we need to consider both the graduation involved in most current income tax structures and the categorical nature of existing social insurance benefits, where a person qualifies by being unemployed, sick, etc. What considerations may lead us to be willing to abandon graduated taxes, with increasing marginal rates of taxation on higher incomes? What are the arguments for replacing existing categorical benefits by a universal basic income?

Historically, the question involves moving from the SI/GT structure to the simplified BI/FT scheme, but analytically the effect may be most easily seen by starting with the BI/FT scheme and asking whether we would like to depart from this by introducing graduated marginal rates and categorical benefits. This is the approach adopted here. Sections 3.2-3.4 are concerned with the case for graduation; Section 3.5 deals with categorical benefits. In neither case is the analysis more than suggestive. A full discussion of just the theoretical merits of the two systems would require substantially more space; to examine the detailed institutional issues is far outside the present scope.


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Public Economics in Action: The Basic Income/Flat Tax Proposal


Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 170

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?