On measuring violations of the progressive principle in income tax systems

Pellegrino, Simone; Vernizzi, Achille

doi:10.1007/s00181-012-0613-1

Cited by 10 publications

(11 citation statements)

References 3 publications

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“…In particular, they defined the concentration curve LZ|X as the Lorenz curve for an attribute Z of income units, when these are ordered by the attribute X. In order to exactly apply the KL Axiom 2 statement, Pellegrino and Vernizzi (2013) propose a different approach for its measurement. However, in this paper the absolute extent of Axiom 2 violations does not strictly matter; as a consequence, we chose to employ the method originally suggested by KL.…”

Section: The Basic Modelmentioning

confidence: 99%

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On Measuring Inequity in Taxation Among Groups of Income Units

Monti

Pellegrino²,

Vernizzi

2013

Review of Income and Wealth

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In this paper a method for analysing the fairness of an income tax system when portioning the population into heterogeneous socio-economic groups is proposed. The equitable tax system is defined by the three axioms given by Kakwani and Lambert (1998) and, as they suggest, inequity is evaluated by the negative influences on the redistributive effect of the tax associated with axiom violations. Measuring the extent of axiom violations among households belonging to different groups, we improve the Kakwani and Lambert analysis, which is able to detect only the existence of overall inequities. We propose a method that allows for evaluation of the contribution of each group to the overall inequity. Moreover, the adopted method enables disentangling the directions of violations. The obtained results allow us to judge how axiom violations discriminate among groups in their reciprocal relationships. An application to the 2010 Italian income tax reveals that inequities disproportionately penalize the household typologies. More precisely, unfairness affects households with children more severely than the other household groups. JEL Codes: C81, H23, H24

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Section: The Basic Modelmentioning

confidence: 99%

“…In order to exactly apply the KL Axiom 2 statement, Pellegrino and Vernizzi () propose a different approach for its measurement. However, in this paper the absolute extent of Axiom 2 violations does not strictly matter; as a consequence, we chose to employ the method originally suggested by KL.…”

mentioning

confidence: 99%

On Measuring Inequity in Taxation Among Groups of Income Units

Monti

Pellegrino²,

Vernizzi

2013

Review of Income and Wealth

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“…Here we employ the micro-simulation model module concerning the PIT updated to the 2014 fiscal year. Technical details regarding the structure of previous versions of this microsimulation model and its applications to the analysis of the Italian PIT and the analysis of inequality indexes decompositions can be found in Pellegrino et al [26], Morini and Pellegrino [7], Vernizzi and Pellegrino [27] and Monti et al [28].…”

Section: The Data and The Micro-simulation Modelmentioning

confidence: 99%

Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

2018

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In this paper we propose a multi-objective evolutionary algorithm for supporting the definition of a personal income tax reform. As a case study, we apply this methodology to the Italian income tax, and consider a recently implemented tax cut. Our optimization algorithm is able to determine a set of tax structures that maximize the redistributive effect of the tax while minimizing its inefficiency-considering for the former the Reynolds-Smolensky index and for the latter the weighted average of taxpayers' effective marginal tax rates. The approach also takes into account two additional factors: the tax has to guarantee a specific revenue and to minimize the share of losing taxpayers with respect to the pre-reform situation. Experimental results clearly demonstrate that the methodology we employ can support the policy-maker's decisions in complex, realworld situations.

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“…Another foundation of the new method is the research of Pellegrino and Vernizzi () and Monti et al . (), who dissect the redistributive effect of personal income tax into terms that quantify violations of the equity axioms presented by Kakwani and Lambert ().…”

Section: Introductionmentioning

confidence: 99%

“…Another foundation of the new method is the research of Pellegrino and Vernizzi (2013) and Monti et al (2013), who dissect the redistributive effect of personal income tax into terms that quantify violations of the equity axioms presented by Kakwani and Lambert (1998). Monti et al (2013) further decompose the new indices into contributions within and across groups, also using the mean difference approach to compute Gini-based indices.…”

Section: Introductionmentioning

confidence: 99%

Impact of Taxes and Benefits on Inequality among Groups of Income Units

Urban

2014

Review of Income and Wealth

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This paper analyzes the redistributive impact of the fiscal system and simultaneously explains how each tax and benefit instrument satisfies the principles of vertical and horizontal equity within and across different groups of income units. The decompositions of the redistributive effect are based on new axioms concerning the vertical and horizontal equity of the overall fiscal system, including taxes and benefits. The method is based on pairwise comparisons of income units and the “micro” concepts of income supremacy change, deprivation from reranking, and income distance change. The decomposition results provide more detailed insights into the income redistribution process than is typical in the literature. This is illustrated by an empirical application of the method to the Croatian scheme of personal income taxes and non‐pension social benefits, in which households are divided into two groups, those with and those without children.

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On measuring violations of the progressive principle in income tax systems

Cited by 10 publications

References 3 publications

On Measuring Inequity in Taxation Among Groups of Income Units

On Measuring Inequity in Taxation Among Groups of Income Units

Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

Impact of Taxes and Benefits on Inequality among Groups of Income Units

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