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Did Tax Reform Reduce Actual US Progressivity? Evidence from the Taxpayer Compliance Measurement Program

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  • John Bishop
  • K. Chow
  • John Formby
  • Chih-Chin Ho
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    Abstract

    Micro data from audited tax returns are used to evaluatechanges in the actual progressitivity of U.S. federal incometaxes in 1979 and 1988, which is distinct from apparent progressivity.Statistical inference methods are applied to global measuresof both actual and apparent residual and liability progression.The analysis reveals an absence of change in the overall levelof actual residual progressivity, but statistically significantdeclines in actual liability progression. The results indicatethat in assessing overall tax progression it is important totake sampling errors into account and that measures of actualtax progressivity can deviate significantly from apparent progressivity. Copyright Kluwer Academic Publishers 1997

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    Bibliographic Info

    Article provided by Springer in its journal International Tax and Public Finance.

    Volume (Year): 4 (1997)
    Issue (Month): 2 (May)
    Pages: 177-197

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    Handle: RePEc:kap:itaxpf:v:4:y:1997:i:2:p:177-197

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    Web page: http://www.springerlink.com/link.asp?id=102915

    Related research

    Keywords: Tax Reform; Actual Progression; TCMP;

    References

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    1. Davies, David G, 1980. "Measurement of Tax Progressivity: Comment," American Economic Review, American Economic Association, vol. 70(1), pages 204-07, March.
    2. Bishop, John A & Formby, John P & Smith, W James, 1991. "International Comparisons of Income Inequality: Tests for Lorenz Dominance across Nine Countries," Economica, London School of Economics and Political Science, vol. 58(232), pages 461-77, November.
    3. Formby, John P & Seaks, Terry G & Smith, W James, 1989. "On the Measurement and Trend of Inequality: A Reconsideration," American Economic Review, American Economic Association, vol. 79(1), pages 256-64, March.
    4. Suits, Daniel B, 1977. "Measurement of Tax Progressivity," American Economic Review, American Economic Association, vol. 67(4), pages 747-52, September.
    5. Kakwani, Nanak C, 1977. "Applications of Lorenz Curves in Economic Analysis," Econometrica, Econometric Society, vol. 45(3), pages 719-27, April.
    6. John P. Formby & W. James Smith & David Sykes, 1986. "Income Redistribution and Local Tax Progressivity: A Reconsideration," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 807-11, November.
    7. Beach, Charles M & Davidson, Russell, 1983. "Distribution-Free Statistical Inference with Lorenz Curves and Income Shares," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 723-35, October.
    8. Feldstein, Martin, 1988. "Imputing Corporate Tax Liabilities to Individual Taxpayers," National Tax Journal, National Tax Association, vol. 41(1), pages 37-59, March.
    9. James Banks & Arie Kapteyn & James P. Smith & Arthur van Soest, 2004. "International Comparisons of Work Disability," Working Papers 155, RAND Corporation Publications Department.
    10. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    11. Pechman, Joseph A, 1990. "The Future of the Income Tax," American Economic Review, American Economic Association, vol. 80(1), pages 1-20, March.
    12. Joel Slemrod, 1992. "Taxation and Inequality: A Time-Exposure Perspective," NBER Working Papers 3999, National Bureau of Economic Research, Inc.
    13. Hayes, Kathy J. & Lambert, Peter J. & Slottje, Daniel J., 1995. "Evaluating effective income tax progression," Journal of Public Economics, Elsevier, vol. 56(3), pages 461-474, March.
    14. Pfahler, Wilhelm, 1987. "Redistributive Effects of Tax Progressivity: Evaluating a General Class of Aggregate Measures," Public Finance = Finances publiques, , vol. 42(1), pages 1-31.
    15. John A. Bishop & John P. Formby & W. James Smith, 1993. "International Comparisons of Welfare and Poverty: Dominance Orderings for Ten Countries," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 707-26, August.
    16. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    17. Beach, Charles M & Richmond, James, 1985. "Joint Confidence Intervals for Income Shares and Lorenz Curves," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(2), pages 439-50, June.
    18. Pechman, Joseph A, 1987. "Tax Reform: Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 11-28, Summer.
    19. Clotfelter, Charles T, 1983. "Tax Evasion and Tax Rates: An Analysis of Individual Returns," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 363-73, August.
    20. Bishop, John A & Chiou, Jong-Rong & Formby, John P, 1994. "Truncation Bias and the Ordinal Evaluation of Income Inequality," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 123-27, January.
    21. Martin Feldstein, 1987. "Imputing Corporate Tax Liabilities to Individual Taxpayers," NBER Working Papers 2349, National Bureau of Economic Research, Inc.
    22. John P. Formby & W. James Smith & Paul D. Thistle, 1990. "The Average Tax Burden and the Welfare Implications of Global Tax Progressivity," Public Finance Review, , vol. 18(1), pages 3-24, January.
    23. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
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    Cited by:
    1. André Decoster & Erwin Ooghe, 2002. "Weighting with individuals, equivalent individuals, or not weighting at all. Does it matter empirically?," Public Economics Working Paper Series ces0215, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    2. Thor O. Thoresen, 2002. "Reduced Tax Progressivity in Norway in the Nineties The Effect from Tax Changes," Discussion Papers 335, Research Department of Statistics Norway.

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