Income Inequality and Progressive Income Taxation in China and India, 1986-2015
AbstractThis paper evaluates the prospects for income tax reform in China during the coming decade (with a comparison to India), and argues that such reforms should rank high on the policy agenda in these two countries. Due to high average income growth and sharply rising top income shares during the 1990s and early 2000s, progressive income taxation is about to raise non-trivial tax revenues in China and India and to become an important political object. According to our projections, the income tax should raise at least 4% of Chinese GDP in 2010 (versus less than 1% in 2000 and 0,1% in 1990), in spite of the 20% nominal rise in the exemption threshold that took effect in 2004. The fact that progressive income taxation is becoming an important policy tool has important consequences for China’s ability to finance social spending and to keep under control the rise in income inequality associated to globalization and growth. Due to faster income growth and to a higher fraction of wage earners in the labor force, the prospects for income tax development look better in China than in India. This potential is however limited by the fact that Chinese top wage-earners are under-taxed relatively to top non-wage income earners.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5703.
Date of creation: May 2006
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Thomas Piketty & Nancy Qian, 2009. "Income Inequality and Progressive Income Taxation in China and India, 1986-2015," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 53-63, April.
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-28 (All new papers)
- NEP-CNA-2006-10-28 (China)
- NEP-CWA-2006-10-28 (Central & Western Asia)
- NEP-DEV-2006-10-28 (Development)
- NEP-PBE-2006-10-28 (Public Economics)
- NEP-PUB-2006-10-28 (Public Finance)
- NEP-SEA-2006-10-28 (South East Asia)
- NEP-TRA-2006-10-28 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas Piketty, 2003. "Income Inequality in France, 1901-1998," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1004-1042, October.
- Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Inégalités et déséquilibres globaux : reconsidérer de vieilles idées pour traiter de nouveaux problèmes
by creel in OFCE le blog on 2013-05-27 09:12:25
- Inequality and Global Imbalances: reconsidering old ideas to address new problems
by creel in OFCE le blog on 2013-05-27 09:50:00
- Sabina Alkire and Suman Seth, 2012.
"Selecting a Targeting Method to Identify BPL Households in India,"
OPHI Working Papers
ophiwp053, Queen Elizabeth House, University of Oxford.
- Sabina Alkire & Suman Seth, 2013. "Selecting a Targeting Method to Identify BPL Households in India," Social Indicators Research, Springer, vol. 112(2), pages 417-446, June.
- Atkinson, Anthony B. & Leigh, Andrew, 2010.
"The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century,"
IZA Discussion Papers
4937, Institute for the Study of Labor (IZA).
- A B Atkinson & Andrew Leigh, 2010. "The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century," CEPR Discussion Papers 640, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Julia Cagé & Lucie Gadenne, 2014. "The Fiscal Cost of Trade Liberalization," Working Papers halshs-00705354, HAL.
- Julia Cagé & Lucie Gadenne, 2014. "The Fiscal Cost of Trade Liberalization," PSE Working Papers halshs-00705354, HAL.
- Thomas Piketty & Emmanuel Saez, 2012. "Optimal Labor Income Taxation," NBER Working Papers 18521, National Bureau of Economic Research, Inc.
- Russell Smyth & Xiaolei Qian, 2008.
"Knowing One'S Lot In Life Versus Climbing The Social Ladder: The Formation Of Redistributive Preferences In Urban China,"
Development Research Unit Working Paper Series
05/08, Monash University, Department of Economics.
- Russell Smyth & Vinod Mishra & Xiaolei Qian, 2010. "Knowing One’s Lot in Life Versus Climbing the Social Ladder: The Formation of Redistributive Preferences in Urban China," Social Indicators Research, Springer, vol. 96(2), pages 275-293, April.
- Rao, Narasimha D., 2013. "Distributional impacts of climate change mitigation in Indian electricity: The influence of governance," Energy Policy, Elsevier, vol. 61(C), pages 1344-1356.
- Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011.
"Top Incomes in the Long Run of History,"
Journal of Economic Literature,
American Economic Association, vol. 49(1), pages 3-71, March.
- Michał Brzeziński, 2013. "Variance estimation for richness measures," Working Papers 2013-03, Faculty of Economic Sciences, University of Warsaw.
- Michał Brzeziński, 2013.
"Asymptotic and bootstrap inference for top income shares,"
2013-01, Faculty of Economic Sciences, University of Warsaw.
- Brzezinski, Michal, 2013. "Asymptotic and bootstrap inference for top income shares," Economics Letters, Elsevier, vol. 120(1), pages 10-13.
- Sabina Alkire and Suman Seth, 2012. "Identifying BPL Households: A Comparison of Methods," OPHI Working Papers ophiwp054, Queen Elizabeth House, University of Oxford.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.