Income Redistribution and Local Tax Progressivity: A Reconsideration

Formby, John P.; Smith, William J.; Sykes, David

doi:10.2307/135328

Cited by 15 publications

(7 citation statements)

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“… Although there have been attempts, no general relation between local and global measures has been established (see Jakobsson , Liu and Formby et al. ). For a discussion of the merits of local versus global measures, see Paturot et al.…”

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confidence: 99%

Personal income tax progressivity and output volatility: Evidence from OECD countries

Rieth

Checherita‐Westphal

Attinasi

2016

Canadian J of Economics

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confidence: 99%

Personal income tax progressivity and output volatility: Evidence from OECD countries

Rieth

Checherita‐Westphal

Attinasi

2016

Canadian J of Economics

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“… See Lambert (2002) for a survey.3 See, e.g.,Kakwani (1977),Hemming and Keen (1983),Eichhorn et al (1984),Liu (1985),Formby et al (1986),Thon (1987),Latham (1988),Thistle (1988),Moyes (1988),Moyes (1994),Le Breton et al (1996),Ebert and Moyes (2000),Ju and Moreno-Ternero (2008).4 See alsoOnrubia et al (2005) andPreston (2007).5 See Section 4 for a discussion of the relationship between our results and the In other words, the marginal rate of substitution of labor for consumption tends to infinity as leisure time vanishes.…”

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confidence: 83%

Inequality reducing properties of progressive income tax schedules: The case of endogenous income

Carbonell‐Nicolau

Llavador

2018

Theoretical Economics

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The case for progressive income taxation is often based on the classic result of Jakobsson (1976) and Fellman (1976), according to which progressive and only progressive income taxes-in the sense of increasing average tax rates on income-ensure a reduction in income inequality. This result has been criticized on the grounds that it ignores the possible disincentive effect of taxation on work effort, and the resolution of this critique has been a longstanding problem in public finance. This paper provides a normative rationale for progressivity that takes into account the effect of an income tax on labor supply. It shows that a tax schedule is inequality reducing only if it is progressive-in the sense of increasing marginal tax rates on income-and identifies a necessary and sufficient condition on primitives under which progressive and only progressive taxes are inequality reducing. Silvestre for their numerous and valuable comments. Humberto Llavador acknowledges financial support from the Spanish Ministry of Science and Innovation through research grants ECO-2014-59225-P and ECO-2015-6755-P. 1 A second normative rationale for income tax progressivity is based on the principle of equal sacrifice, which dates back

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“…The set of all utility functions satisfying the above conditions is denoted by U . progressivity (see, e.g., Kakwani (1977); Hemming and Keen (1983); Eichhorn et al (1984); Liu (1985); Formby et al (1986); Thon (1987); Latham (1988); Thistle (1988); Moyes (1988Moyes ( , 1994; Le Breton et al (1996); Ebert and Moyes (2000); Ju and Moreno-Ternero (2008)).…”

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confidence: 99%

Inequality Reducing Properties of Income Tax Schedules

Carbonell‐Nicolau

Llavador

2018

SSRN Journal

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In a classic result, Jakobsson (1976) and Fellman (1976) showed that average-rate progressive, and only average-rate progressive, income taxes reduce income inequality. Carbonell-Nicolau and Llavador (forthcoming) extended this result to the case of endogenous income, showing that marginal-rate progressivity-in the sense of increasing marginal tax rates on income-is necessary for tax structures to be inequality reducing, and obtaining necessary and sufficient conditions on the social utility function under which progressive and only progressive taxes are inequality reducing. Building on Carbonell-Nicolau and Llavador (forthcoming), this paper furnishes conditions on primitives under which various subclasses of progressive taxes are inequality reducing. The main results in Carbonell-Nicolau and Llavador (forthcoming) are obtained as particular cases of the more general framework presented here. Restricting the set of taxes allowsfor larger classes of preferences consistent with inequality reducing income taxation. As an illustration of the results' practical implications, we provide a precise characterization of the subclass of (progressive) taxes that are inequality reducing for some standard families of preferences.

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Income Redistribution and Local Tax Progressivity: A Reconsideration

Cited by 15 publications

References 5 publications

Personal income tax progressivity and output volatility: Evidence from OECD countries

Personal income tax progressivity and output volatility: Evidence from OECD countries

Inequality reducing properties of progressive income tax schedules: The case of endogenous income

Inequality Reducing Properties of Income Tax Schedules

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