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Inference tests for tax progressivity and income redistribution: the Suits approach

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  • Jordi Arcarons
  • Samuel Calonge

Abstract

The Suits index is often used in tax policy analysis to measure progressivity and to detect changes in progressivity over time and between different fiscal policies. The lack of attention that has been devoted to the inference issue to date is surprising. In this paper, the limiting distribution of the Suits index estimator is derived and simple plug-in formulae for the index estimator and its sampling variance are provided. By means of a simulation analysis, we show that inferences based on first-order asymptotics perform well for moderately large samples. Bootstrap-t – which uses the plug-in variance estimator – appears to perform well. The accuracy of the proposed inference tests is also illustrated by means of an empirical application that uses Spanish income tax data. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Jordi Arcarons & Samuel Calonge, 2015. "Inference tests for tax progressivity and income redistribution: the Suits approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 207-223, June.
    • Handle: RePEc:kap:jecinq:v:13:y:2015:i:2:p:207-223
    DOI: 10.1007/s10888-014-9280-0
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    References listed on IDEAS

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    1. Formby, John P & Seaks, Terry G & Smith, W James, 1981. "A Comparison of Two New Measures of Tax Progressivity [Measurement of Tax Progressivity: An International Comparison]. [Measurement of Tax Progressivity]," Economic Journal, Royal Economic Society, vol. 91(364), pages 1015-1019, December.
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    Cited by:

    1. Magda WISNIEWSKA-KUZMA, 2020. "Measurement of personal income tax progressivity in the post-socialist countries of Europe compared to other OECD countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 113-131, December.

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    More about this item

    Keywords

    Asymptotic inference; Bootstrap-t ; Suits index; U-statistics; C12; H20; H23;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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