Tax Progressivity and Income Inequality

Tax Progressivity and Income Inequality
Author: Joel Slemrod
Publisher: Cambridge University Press
Total Pages: 388
Release: 1996-10-13
Genre: Business & Economics
ISBN: 9780521587761

This book assembles nine papers on tax progressivity and its relationship to income inequality, written by leading public finance economists. The papers document the changes during the 1980s in progressivity at the federal, state, and local level in the US. One chapter investigates the extent to which the declining progressivity contributed to the well-documented increase in income inequality over the past two decades, while others investigate the economic impact and cost of progressive tax systems. Special attention is given to the behavioral response to taxation of high-income individuals, portfolio behavior, and the taxation of capital gains. The concluding set of essays addresses the contentious issue of what constitutes a 'fair' tax system, contrasting public attitudes towards alternative tax systems to economists' notions of fairness. Each essay is followed by remarks of a commentator plus a summary of the discussion among contributors.

Inequality and Optimal Redistributive Tax and Transfer Policies

Inequality and Optimal Redistributive Tax and Transfer Policies
Author: Mr.Howell H. Zee
Publisher: International Monetary Fund
Total Pages: 30
Release: 1999-04-01
Genre: Business & Economics
ISBN: 145184803X

This paper explores the revenue-raising aspect of progressive taxation and derives, on the basis of a simple model, the optimal degree of tax progressivity where the tax revenue is used exclusively to finance (perfectly) targeted transfers to the poor. The paper shows that not only would it be optimal to finance the targeted transfers with progressive taxation, but that the optimal progressivity increases unambiguously with growing income inequality. This conclusion holds up under different assumptions about the efficiency cost of taxation and society’s aversion to inequality.

Personal Income Tax Progressivity: Trends and Implications

Personal Income Tax Progressivity: Trends and Implications
Author: Claudia Gerber
Publisher: International Monetary Fund
Total Pages: 24
Release: 2018-11-20
Genre: Business & Economics
ISBN: 1484386000

This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pre-tax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. Regressions do not reveal a significant impact of progressivity on growth, suggesting that efficiency costs of progressivity may be small—at least for degrees of progressivity observed in the sample.

Tax Progressivity and Income Inequality

Tax Progressivity and Income Inequality
Author: Denvil Duncan
Publisher:
Total Pages: 0
Release: 2008
Genre:
ISBN:

This paper examines whether income inequality is affected by the structural progressivity of national income tax systems. Using detailed personal income tax schedules for a large panel of countries, we develop and estimate comprehensive, time-varying measures of structural progressivity of national income tax systems over the 1981-2005 period. We find that while progressivity reduces observed inequality in reported gross and net income, it has a significantly smaller impact on true inequality, approximated by consumption-based measures of Gini. We show theoretically and empirically that, under specific conditions, tax progressivity may increase actual inequality, especially in countries with weak law and order and a large informal nontaxable sector. The paper discusses implications of these results for increasingly popular flat tax policies. The Kuznets hypothesis is also supported by the estimates.

Income Tax Progressivity and Income Inequality

Income Tax Progressivity and Income Inequality
Author: Simegn Nigusse
Publisher: LAP Lambert Academic Publishing
Total Pages: 104
Release: 2014-10-08
Genre:
ISBN: 9783659578229

Economists justify fair taxation in different ways. one of these approaches is the "utilitarian" approach that argues the amount of tax levied should be based on additional utility that a person may derive from consumption of valuable goods. But, the level of marginal utility for owning money differ from other commodities so that it is inapplicable. On the other hand, the assignments of specific tax should be associated with the benefits that a taxpayer drive from public institutes is also injustice as it cannot assess all individuals those who may not stand at the door of government offices for that tax period. The remaining is the "ability to pay" principle, which importantly lies on the amount of taxable income that the taxpayer earn in the tax period.It is true that individuals that derive similar income should bear similar tax burden horizontal equity, and those who earn more should bear more tax burden. Nonetheless, it is not an easy task to measure the capacity of individuals only on the amount of their earnings as it does not account the number of dependents that the taxpayer may support.

The Political Economy of Inequality

The Political Economy of Inequality
Author: Sisay Asefa
Publisher:
Total Pages:
Release: 2020
Genre: Economic policy
ISBN: 9780880996723

"This book encapsulates the six papers delivered during the 54th Werner Sichel Lecture Series, held on the campus of Western Michigan University during the academic year 2017-2018. The book's title is taken from the theme for that year's lecture series, "The Political Economy of Inequality: U.S. and Global Dimensions.""--

Top Incomes

Top Incomes
Author: A. B. Atkinson
Publisher: OUP Oxford
Total Pages: 984
Release: 2010-04-01
Genre: Business & Economics
ISBN: 0191500887

A rapidly growing area of economic research investigates the top of the income distribution using data from income tax records. This volume brings together studies of top incomes for twelve countries from around the world, including China, India, Japan, Argentina and Indonesia. Together with the first volume, published in 2007, the studies cover twenty two countries. They have a long time span, the earliest data relating to 1875 (for Norway), allowing recent developments to be placed in historical perspective. The volume describes in detail the source data and the methods employed. It will be an invaluable reference source for researchers in the field. Individual country chapters deal with the specific nature of the data for each of the countries, and describe the long-term evolution of top income shares. In the countries as a whole, dramatic changes have taken place at the top of the income distribution. Over the first part of the century, top income shares fell markedly. This largely took the form of a reduction in capital incomes. The different authors examine the impact of the First and Second World Wars, contrasting countries that were and were not engaged. They consider the impact of depressions and banking crises, and pay particular attention to the impact of progressive taxation. In the last 30 years, the shares of top incomes have increased markedly in the US and other Anglo-Saxon countries, reflecting the increased dispersion of earnings. The volume includes statistics on the much-discussed top pay and bonuses, providing a global perspective that discusses important differences between countries such as the lesser increase in Continental Europe. This book, together with volume 1, documents this interesting development and explores the underlying causes. The findings are brought together in a final summary chapter by Atkinson, Piketty and Saez.

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
Author: Emmanuel Saez
Publisher: W. W. Norton & Company
Total Pages: 232
Release: 2019-10-15
Genre: Business & Economics
ISBN: 1324002735

America’s runaway inequality has an engine: our unjust tax system. Even as they became fabulously wealthy, the ultra-rich have had their taxes collapse to levels last seen in the 1920s. Meanwhile, working-class Americans have been asked to pay more. The Triumph of Injustice presents a forensic investigation into this dramatic transformation, written by two economists who revolutionized the study of inequality. Eschewing anecdotes and case studies, Emmanuel Saez and Gabriel Zucman offer a comprehensive view of America’s tax system, based on new statistics covering all taxes paid at all levels of government. Their conclusion? For the first time in more than a century, billionaires now pay lower tax rates than their secretaries. Blending history and cutting-edge economic analysis, and writing in lively and jargon-free prose, Saez and Zucman dissect the deliberate choices (and sins of indecision) that have brought us to today: the gradual exemption of capital owners; the surge of a new tax avoidance industry, and the spiral of tax competition among nations. With clarity and concision, they explain how America turned away from the most progressive tax system in history to embrace policies that only serve to compound the wealth of a few. But The Triumph of Injustice is much more than a laser-sharp analysis of one of the great political and intellectual failures of our time. Saez and Zucman propose a visionary, democratic, and practical reinvention of taxes, outlining reforms that can allow tax justice to triumph in today’s globalized world and democracy to prevail over concentrated wealth. A pioneering companion website allows anyone to evaluate proposals made by the authors, and to develop their own alternative tax reform at taxjusticenow.org.