Optimal taxation in national economies: net income entropy, weighted incomes-inequalities and fuzzy saving propensities

  • Authors:

  • G. Jumarie

  • Affiliations:

  • Department of Mathematics, University of Quebec at Montreal, P.O. Box, Downtown Street, Montreal, Qc, H3C 3P8, Canada

  • Venue:
  • International Journal of Systems Science
  • Year:
  • 2005

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Abstract

The paper deals with the optimal taxation in national economies as defined by a measure of inequality suggested by informational entropy. It is shown how one can introduce fuzziness in this model to take account of various uncertainties in the definition of the problem, and how this measure of inequality provides a useful approach to take account of the saving propensity and the tax evasion propensity of the taxpayers. The first model is defined by an entropic function which refers to the point of view of the tax payers only, and the second model is a weighted combination of entropic functions which takes account of the points of view of both the tax payers and the government. The results so obtained are quite consistent with practice.