Personal Income Taxation and the Principle of Equal Sacrifice Revisited

Abstract

This paper shows that, in the domain of piecewise linear statutory income tax functions, the principle of equal sacrifice implies tax progressivity. The progressivity implication of the doctrine is, in fact, stronger: the equal sacrifice principle, in essence, characterizes marginal rate progressivity, a result which is in sharp contrast with the standard literature on public finance. We also apply our findings to the personal statutory income taxation practices of the OECD countries and observe that the United States and Turkey were the only ones violating the principle of equal sacrifice in the time period 1988 to 1991.