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2 edition of Progressivity effects of structural income tax reforms found in the catalog.

Progressivity effects of structural income tax reforms

Michael Keen

Progressivity effects of structural income tax reforms

by Michael Keen

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  • 32 Currently reading

Published by University of Kent at Canterbury in Canterbury .
Written in English


Edition Notes

StatementMichael Keen, Harry Papapanagos and Anthony Shorrocks.
SeriesStudies in economics / University of Kent at Canterbury -- no.96/12, Studies in economics -- no.96/12.
ContributionsPapapanagos, Harry., Shorrocks, Anthony F., University of Kent at Canterbury.
ID Numbers
Open LibraryOL13843512M

  While this paper focused on personal income taxes, developments in capital income taxation are also likely to have contributed to reducing overall progressivity: Capital income is distributed more unequally than labor income, has risen over the past few decades as a share of total income (IMF, b), and is often taxed at a lower rate than. This paper generalises the core theory to allow for zero tax payments, and applies the new framework to the analysis of allowances, income‐related deductions and tax credits. Log concavity of the tax schedule—a property quite distinct from any existing notion of progressivity—emerges as the critical determinant of whether the distribution Cited by:

In /11, the taxes less transfers as a proportion of original income were: Table 1 – The effective tax rate of quintile groups for all households in /11 Source: ONS, The effects of tax and benefit on household income, /11, This means that, on average, for every £1 of income earned by a household in the middle. This paper computes the optimal progressivity of the income tax code in a dynamic general equilibrium model with household heterogeneity in which uninsurable labor productivity risk gives rise to a nontrivial income and wealth distribution. A progressive tax system serves as a partial substitute for missing insurance markets and enhances an equal distribution of economic.

2. Predictions of effects of income taxes on job search Our empirical examination focuses on effects of income tax progressivity on the decision whether to change jobs. This work is part of a broader exploration of the effects of the tax policy on risk-taking (Gentry and Hubbard (a,b) study effects of Cited by: steady state Gini index of after tax income that obtains after the reform is Furthermore, we nd that this reform reduces aggregate welfare. To sum up, our contribution to the consumption versus income-based tax reforms is that consumption-based tax reforms bring .


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Progressivity effects of structural income tax reforms by Michael Keen Download PDF EPUB FB2

In this paper, we approach the question of how tax progressivity affects pre-tax income inequality from a new angle: the effect of tax reforms on the income shares earned by the top of the income distribution.

Tax reforms are particularly tractable study objects for our purposes. First, they offer a distinct and usually large-scale source of. The theoretical analysis of tax progressivity has proceeded on the unrealistic assumption that tax liability is never zero, thereby precluding a systematic examination of the progressivity effects of such basic tax reforms as an increase in personal allowances.

This paper extends the core results on progressivity to cover zero tax payments, and applies these new results to the analysis of. 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 s in Author: Joel Slemrod. A broad definition of progressivity, that tax burdens rise with household income, masks a host of ambiguities in measuring the effect of a tax change.

The percentage change in after-tax income is the most reliable measure of the progressivity of such a change. A tax is progressive if, on average. This book assembles nine research papers on tax progressivity and its relationship to income inequality, written by leading public finance economists.

Progressivity effects of structural income tax reforms book papers document the changes during the s in progressivity at the federal, state, and local level in the U.S.

Conceptual issues about how to measure progressivity are by: A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate.

The term can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. The purpose of this paper is to show how some normative criteria, theoretically justified, can be used to evaluate the welfare effects of income tax : Francesca Stroffolini. In general, the United States federal income tax is progressive, as rates of tax generally increase as taxable income increases, at least with respect to individuals that earn wage a group, the lowest earning workers, especially those with dependents, pay no income taxes and may actually receive a small subsidy from the federal government (from child credits and the Earned Income Tax.

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 Cited by: 3.

Usually, only initial revenue effects of personal income tax reforms are considered. However, a tax reform characterized by base broadening in exchange for rate reduction can reduce the income elasticity of tax revenue.

In that case, the increase in revenue after income growth will be relatively smaller: the tax reform has a negative effect on revenue in the second by: "Progressivity Effects of Structural Income Tax Reforms," Studies in EconomicsSchool of Economics, University of Kent.

Michael Keen & Henry Papapanagos & Anthony Shorrocks, " Progressivity effects of structural income tax reforms," IFS Working Papers W96/17, Institute for. This report finds that both federal and state income taxes are generally progressive but (1) state systems are much less progressive than the federal system and (2) the degree of progressivity varies widely among the states.

Federal income taxes became more progressive following legislation that increased high-income tax rates. The higher federal tax rates also increased. Introduction: main PIT reforms before q Reform: ü introduction of tax allowances, individual and children. ü reduction of tax brackets from 8 to 6, fall in highest marginal tax rate (from 56% to 45%) and increase in lowest (from 18 to 20%) and intermediate ones ü capital income 20% flat tax Reform cost: approx.

19% revenue (Levy and Mercader-Prats. 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.

the Earned Income Tax Credit - EITC in the United States), or through a general negative income tax (akin to a universal basic income); and/or (iii) help raise revenues required for inequality-reducing spending measures.

At the upper end of the income (and wealth) distribution, especially as Cited by: 3. PROGRESSIVITY EFFECTS OF THE TAX REFORM ACT OF ** STANLEY A. KOPPELMAN* T HETaxReformActof has structure. The modification of an existing broadened the individual income tax base, such as by expanding the definition base and reduced the tax rates which are of income, is also analytically separate applied to this expanded by: 3.

The relatively large decline in tax shares of lower income citizens over past years means that the tax code has become even more progressive since Reasonable people may disagree about the proper level of tax progressivity, but it is important to recognize how progressive our current system is.

Using a utilitarian steady state social welfare criterion we find that the optimal US income tax is well approximated by a flat tax rate of % and a fixed deduction of about $ 9, The steady state welfare gains from a fundamental tax reform towards this tax system are equivalent to % higher consumption in each state of the by: Economic impact Because the new law reduces marginal tax rates, reduces the user cost of capital and makes other policy improvements, the legislation will have a positive impact on the U.S.

economy. Three years ago, I authored a report indicating that by one measure, the progressivity of the federal individual income tax increased from to when one also considers the expansion of refundable tax credits that are administered via the federal individual income tax.

However, new data available indicates that my conclusion needs to be partially : Gerald Prante. taxes on corporate equity income lower the after-tax return to savings but have less distorting effects on investment location and are more likely to fall on owners of capital than workers.

This logic suggests there may be both efficiency gains and increases in progressivity from shifting.Progressive tax, tax that imposes a larger burden (relative to resources) on those who are opposite, a regressive tax, imposes a lesser burden on the progressivity is based on the assumption that the urgency of spending needs declines as the level of spending increases (economists call this the declining marginal utility of consumption), so that wealthy people can afford.This paper investigates the progressivity of personal income tax in South Africa over the period to We use the effective, redistributive and disproportionality measures of progressivity and find that progressivity of the tax system increased over the period to Cited by: