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What Makes the Personal Income Tax Progressive? A Comparative Analysis for Fifteen OECD Countries

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Author Info

  • Adam Wagstaff

    ()

  • Eddy van Doorslaer

Abstract

In this paper, we explore the roles of tax credits, rate structures, allowances and deductions in determining the overall progressivity of net income tax liabilities in fifteen OECD countries. Three clusters emerge: (i) the rate-structure countries, Australia, France, Italy, the Netherlands and Spain, where the rate effect is the dominant (but not the only) source of progressivity of gross and net tax liabilities; (ii) the allowance countries, the English-speaking countries other than Australia, where allowances are the dominant source of progressivity; and (iii) the mixed structure countries, Belgium, Finland, Germany and Sweden, where roughly half of the progressivity of gross tax liabilities is attributable to the rate structure. Copyright Kluwer Academic Publishers 2001

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File URL: http://hdl.handle.net/10.1023/A:1011268209860
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Bibliographic Info

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

Volume (Year): 8 (2001)
Issue (Month): 3 (May)
Pages: 299-316

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Handle: RePEc:kap:itaxpf:v:8:y:2001:i:3:p:299-316

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

Related research

Keywords: personal income tax; sources of progressivity;

References

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  1. Lambert, Peter J & Pfahler, Wilhelm, 1992. "Income Tax Progression and Redistributive Effect: The Influence of Changes in the Pre-tax Income Distribution," Public Finance = Finances publiques, , vol. 47(1), pages 1-16.
  2. Michael Keen & Henry Papapanagos & Anthony Shorrocks, 1996. "Progressivity effects of structural income tax reforms," IFS Working Papers W96/17, Institute for Fiscal Studies.
  3. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
  4. Zandvakili, Sourushe, 1994. "Income Distribution and Redistribution through Taxation: An International Comparison," Empirical Economics, Springer, vol. 19(3), pages 473-91.
  5. Sophia Delipalla & Harry Papapanagos, 1996. "The Distributional Superiority of Tax Credits," Studies in Economics 9608, Department of Economics, University of Kent.
  6. Kakwani, Nanak C & Podder, N, 1976. "Efficient Estimation of the Lorenz Curve and Associated Inequality Measures from Grouped Observations," Econometrica, Econometric Society, vol. 44(1), pages 137-48, January.
  7. Pfahler, Wilhelm, 1990. "Redistributive Effect of Income Taxation: Decomposing Tax Base and Tax Rates Effects," Bulletin of Economic Research, Wiley Blackwell, vol. 42(2), pages 121-29, April.
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Citations

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Cited by:
  1. Cathal O'Donoghue & Massimo Baldini, 2004. "Modelling the Redistributive Impact of Indirect Taxes in Europe: An Application of EUROMOD," Working Papers 0077, National University of Ireland Galway, Department of Economics, revised 2004.
  2. Andreas Peichl & Thilo Schaefer, 2008. "Wie progressiv ist Deutschland?: Das Steuer- und Transfersystem im europäischen Vergleich," SOEPpapers on Multidisciplinary Panel Data Research 102, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Verbist, Gerlinde, 2004. "Redistributive effect and progressivity of taxes: an international comparison across the EU using EUROMOD," EUROMOD Working Papers EM5/04, EUROMOD at the Institute for Social and Economic Research.
  4. John Creedy & Norman Gemmell, 2013. "Measuring revenue responses to tax rate changes in multi-rate income tax systems: behavioural and structural factors," International Tax and Public Finance, Springer, vol. 20(6), pages 974-991, December.
  5. Ivica Urban, 2009. "Kakwani decomposition of redistributive effect: Origins, critics and upgrades," Working Papers 148, ECINEQ, Society for the Study of Economic Inequality.
  6. André Decoster & Isabelle Standaert & Christian Valenduc & Guy Van Camp, 2000. "What makes Personal Income Taxes progressive? The case of Belgium," Public Economics Working Paper Series ces0008, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  7. Wagstaff, Adam & Doorslaer, Eddy van, 2001. "Paying for health care : quantifying fairness, catastrophe, and impoverishment, with applications to Vietnam, 1993-98," Policy Research Working Paper Series 2715, The World Bank.
  8. John Creedy & Norman Gemmell, 2011. "Tax Rates and Revenue Changes: Behavioural and Structural Factors," Treasury Working Paper Series 11/05, New Zealand Treasury.
  9. Heiko Müller & Caren Sureth, 2009. "Income tax statistics analysis: A comparison of microsimulation versus group simulation," International Journal of Microsimulation, Interational Microsimulation Association, vol. 2(1), pages 32-48.
  10. Ahmed, Vaqar & O'Donoghue, Cathal, 2009. "Redistributive effect of personal income taxation in Pakistan," MPRA Paper 16700, University Library of Munich, Germany.
  11. John Creedy & Norman Gemmell, 2013. "Revenue-Maximising Elasticities of Taxable Income in Multi-Rate Income Tax Structures," Treasury Working Paper Series 13/27, New Zealand Treasury.

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