Taxation and Well‐being

Bernard Van Praag

in Happiness Quantified

Published in print April 2004 | ISBN: 9780198286547
Published online January 2005 | e-ISBN: 9780191718601 | DOI:
Taxation and Well‐being

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This chapter examines the feasibility of a lump-sum tax based ‘ability’, defined as a function of IQ and education. Empirical research on a Dutch database shows that shifting from income-based to an ability-based taxation would not have devastating effects on short-term net income positions. Although individuals with low IQs will have to pay extra taxes while those with the highest IQs mostly gain, this effect is restricted to a gain or loss of roughly just 10% of net monthly income. These small effects are attributed to the equitable tax rates in the Netherlands, and the limitation of the study to full-time employees.

Keywords: lump-sum tax; ability; IQ; education; income tax; tax rates; Netherlands

Chapter.  10862 words. 

Subjects: Microeconomics

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