The Contribution of US Taxes and Social Transfers to Income Redistribution
AbstractThe aim of this work is to solve the problem of nonadditivity revealed by work that calculates the redistributive effects of the budget or public policies made up of different instruments of income or public spending. To do this, the authors use the Shapley value. This technique allows us to consistently, symmetrically, and directly decompose the redistributive effect and the vertical and horizontal effects. This method is consistent because the total effects can be explained by the sum of the individual contributions; it is symmetrical because it does not depend on the aggregation ranking of the instruments; and it is direct because each index can be calculated without the need to calculate the rest. The main result obtained for the case of taxes and social transfers in the United States is that previous calculations undervalued the redistributive effects and their vertical and horizontal components for taxes and transfers. Undervaluation is more important for taxes.
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Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 40 (2012)
Issue (Month): 3 (May)
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Find related papers by JEL classification:
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
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- Ivica Urban, 2014. "Contributions of taxes and benefits to vertical and horizontal effects," Social Choice and Welfare, Springer, Springer, vol. 42(3), pages 619-645, March.
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