Tax Salience: How Requiring Transparency Affects the Price of Equality (opens in new tab)

Less-salient taxes can ease the classic equality-efficiency trade-off by making people respond less to taxation. But deliberately obscuring taxes may be viewed as dishonest. This creates a three-way trade-off between equality, efficiency, and honesty. We analyze this trade-off in a simple setting with a linear income tax. We define and characterize the morally efficient frontier, trading off utilitarian welfare against honesty or transparency. C...