ODE Models of Wealth Concentration and Taxation

Authors

Bruce Boghosian, Tufts University and American University of ArmeniaFollow
Christoph Borgers, Tufts UniversityFollow

Publication Date

1-4-2024

Keywords

wealth inequality, oligarchy, transcritical bifurcation

Disciplines

Economics | Mathematics | Science and Mathematics Education

Abstract

We refer to an individual holding a non-negligible fraction of the country’s total wealth as an oligarch. We explain how a model due to Boghosian et al. can be used to explore the effects of taxation on the emergence of oligarchs. The model suggests that oligarchs will emerge when wealth taxation is below a certain threshold, not when it is above the threshold. The underlying mechanism is a transcritical bifurcation. The model also suggests that taxation of income and capital gains alone cannot prevent the emergence of oligarchs. We suggest several opportunities for students to explore modifications of the model.

Recommended Citation

Boghosian, Bruce and Borgers, Christoph (2024) "ODE Models of Wealth Concentration and Taxation," CODEE Journal: Vol. 17, Article 10.
Available at: https://scholarship.claremont.edu/codee/vol17/iss1/10

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License.