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Happiness QuantifiedA Satisfaction Calculus Approach$
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Bernard van Praag and Ada Ferrer-i-Carbonell

Print publication date: 2004

Print ISBN-13: 9780198286547

Published to Oxford Scholarship Online: January 2005

DOI: 10.1093/0198286546.001.0001

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Taxation and Well‐being

Taxation and Well‐being

(p.239) 12 Taxation and Well‐being
Happiness Quantified

Bernard Van Praag

Oxford University Press

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

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