Positional equity and equal sacrifice: design principles for an EU-wide income tax?

Conditions are explored under which a putative EU-wide layer of income tax, additional to the national income taxes of the Member States, would: (a) be horizontally equitable, taking the equals in different EU counties to be those at the same percentile points in the country-specific income distributions, assuming these to differ in logarithms by location and scale only; (b) satisfy an extended equity criterion, that of equal progression among equals; and (c) engender equal sacrifices from the citizens of each country in terms of rank-dependent and utilitarian social evaluation functions. Numerical simulations are undertaken to explore the form that such an EU-wide income tax would take and the properties it would have.UnpublishedAraar, A. and J.-Y. Duclos (2005). An Atkinson-Gini class of social evaluation functions: theory and illustration using data from the Luxembourg Income Study. LIS Working Paper No. 416, Syracuse University. Atkinson, A.B. (1970). 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