A local measure of classical horizontal inequity (HI) in an income tax or tax-benefit system is proposed and aggregated into a global index. This index expresses the revenue gain per capita that would come from eliminating HI welfare-neutrally, and also reveals the loss of vertical performance, in terms of the Blackorby and Donaldson (1984) progressivity index, caused by the presence of HI. Non-parametric estimation procedures that can be used to tackle the "identification problem" are delineated. An application to the Canadian tax-benefit system between 1981 and 1994 reveals the changing profile of local HI, its sources, and its aggregate significance.
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Volume (Year): 33 (2000) Issue (Month): 1 (February) Pages: 87-113 Download reference. The following formats are available: HTML
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Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:87-113
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Find related papers by JEL classification: C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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