Is an inequality-neutral flat tax reform really neutral?
AbstractLet us assume a revenue- and inequality-neutral flat tax reform shifting from a graduated-rate tax. Is this reform really distributional neutral? Traditionally, there has been a bias toward the inequality analysis, forgetting other relevant aspects of the income distribution. This kind of reforms implies a set of composite transfers, both progressive and regressive, even though inequality remains unchanged. This paper shows that polarization is a useful tool for characterizing this set of transfers caused by inequality-neutral tax reforms. A simulation exercise illustrates how polarization can be used to discriminate between two inequality-neutral tax alternatives.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/43.
Length: 26 pages
Date of creation: 2004
Date of revision:
polarization; inequality; flat tax;
Other versions of this item:
- Juan Prieto Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, . "Is An Inequality-Neutral Flat Tax Reform Really Neutral?," Working Papers 29-04 Classification-JEL , Instituto de Estudios Fiscales.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D39 - Microeconomics - - Distribution - - - Other
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-06-22 (Accounting & Auditing)
- NEP-ALL-2004-06-22 (All new papers)
- NEP-PBE-2004-06-22 (Public Economics)
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