On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates

Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Cleveland
Working Papers
The Politics of Flat Taxes
Daniel R. Carroll
James Dolmas
Eric R. Young

We study the determination of flat tax systems using a workhorse macroeconomic model of inequality. Our first result is that, despite the multidimensional policy space, equilibrium policies are typically unique (up to a fine grid numerical approximation). The majority voting outcome features (i) zero labor income taxation, (ii) simultaneous use of capital income and consumption taxation, and (iii) generally low transfers. We discuss the role of three factors—the initial heterogeneity in sources of income, the mobility of income and wealth, and the forward-looking aspect of voting—in determining the equilibrium mix of taxes.

Download Full text
Cite this item
Daniel R. Carroll & James Dolmas & Eric R. Young, The Politics of Flat Taxes, Federal Reserve Bank of Cleveland, Working Papers 144201, 06 Sep 2017.
More from this series
Note: First version December 2014, with the title, “Majority Voting: A Quantitative Investigation.”
JEL Classification:
Subject headings:
Keywords: Political Economy; Essential Set; Voting; Inequality; Incomplete Markets
DOI: 10.26509/frbc-wp-201442r
For corrections, contact 4D Library ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal