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A proposal for a simple average-based progressive taxation system

Author

Listed:
  • Dirk-Hinnerk Fischer

    (Tallinn University of Technology, Tallinn, Estonia)

  • Simona Ferraro

    (Tallinn University of Technology, Tallinn, Estonia)

Abstract

This paper is a first theoretical presentation of a simple progressive taxation system. The system is based on two adaptations of one easily calculable formula that is based on the societal average income of the previous year. The system contributes to academic discussions as it is a novel approach. It is a progressive tax that does not discriminate against anyone as the progression increases continuously and the increase in tax payment does not go beyond the additional income. The analysis in the paper shows that the core advantage of the system is its simple, transparent and adaptable mechanism.

Suggested Citation

  • Dirk-Hinnerk Fischer & Simona Ferraro, 2019. "A proposal for a simple average-based progressive taxation system," Public Sector Economics, Institute of Public Finance, vol. 43(2), pages 141-165.
    • Handle: RePEc:ipf:psejou:v:43:y:2019:i:2:p:141-165
    DOI: 10.3326/pse.43.2.2
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    taxation; flat tax; progressive tax; taxation efficiency;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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