A Note On The Principle Of Equal Opportunities

Abstract

This note presents an empirical analysis of optimal taxation in Chile, adopting Roemer’s equality of opportunities as the evaluation criterion. The equality of opportunities optimal tax rules seek to equalize income differentials arising from factors beyond the control of the individual. Roemer’s theory of equality of opportunities (Roemer, 1998) has been employed to compute the extent to which tax-andtransfer regimes in some OECD countries equalize opportunities among citizens for income acquisition. In this note we apply this approach to Chile, a developing economy, and compare the results to those reported in Roemer, Aaberge, Colombino, Fritzell, Jenkins, Marx, Page, Pommer, Ruiz-Castillo, Segundo, Tranaes, Wagner and Zubiri (2003). We find that the optimal tax rate in Chile according to Roemer’s equalopportunities approach should be zero.