IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp10978.html
   My bibliography  Save this paper

Should the Rich Be Taxed More? The Fiscal Inequality Coefficient

Author

Listed:
  • Hatgioannides, John

    (City University London)

  • Karanassou, Marika

    (Queen Mary, University of London)

  • Sala, Hector

    (Universitat Autònoma de Barcelona)

Abstract

This paper holistically addresses the effective (relative) income tax contribution of a given in-come (or, wealth) group. The widely acclaimed standard in public policy is the absolute benefaction of a given income group in filling up the fiscal coffers. Instead, we focus on the ratio of the average income tax rate of an income group divided by the percentage of national income (or wealth) appropriated by the same income group. In turn, we develop the Fiscal Inequality Coefficient which compares the effective percentage income tax payments of pairs of income (or wealth) groups. Using data for the US, we concentrate on pairs such as the Bottom 90% versus Top 10%, Bottom 99% versus Top 1%, and Bottom 99.9% versus Top 0.1%. We conclude that policy makers with a strong social conscience should re-evaluate the progressivity of the income tax system and make the richest echelons of the income and wealth distributions pay a fairer and higher tax.

Suggested Citation

  • Hatgioannides, John & Karanassou, Marika & Sala, Hector, 2017. "Should the Rich Be Taxed More? The Fiscal Inequality Coefficient," IZA Discussion Papers 10978, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10978
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp10978.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    2. Marika Karanassou & Hector Sala, 2012. "Distributional Consequences of Capital Accumulation, Globalisation and Financialisation in the US," Working Papers 695, Queen Mary University of London, School of Economics and Finance.
    3. Jon D. Wisman & James F. Smith, 2011. "Legitimating Inequality: Fooling Most of the People All of the Time," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(4), pages 974-1013, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jon D. Wisman, 2013. "Why Marx still matters," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 4(3), pages 229-242.
    2. Ravallion, Martin, 2019. "Global inequality when unequal countries create unequal people," European Economic Review, Elsevier, vol. 111(C), pages 85-97.
    3. Thomas Blanchet & Juliette Fournier & Thomas Piketty, 2022. "Generalized Pareto Curves: Theory and Applications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 263-288, March.
    4. Konul Amrahova Riegel, 2021. "Solving the Muni Puzzle: Who Benefits from Tax Exemption of Government Debt?," Public Finance Review, , vol. 49(1), pages 71-105, January.
    5. Joshua Greenstein, 2020. "The Precariat Class Structure and Income Inequality among US Workers: 1980–2018," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(3), pages 447-469, September.
    6. Christian Awuku-Budu & Dirk van Duym, 2022. "Developing Statistics on the Distribution of State Personal Income: Methodology and Preliminary Results," BEA Working Papers 0197, Bureau of Economic Analysis.
    7. Matthew Fisher-Post, 2020. "Factor Shares in the long run," World Inequality Lab Working Papers hal-02876978, HAL.
    8. Arun Advani, 2022. "Who does and doesn't pay taxes?," Fiscal Studies, John Wiley & Sons, vol. 43(1), pages 5-22, March.
    9. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts," Working Papers 201704, World Inequality Lab.
    10. Bartels, Charlotte, 2019. "Top Incomes in Germany, 1871-2014," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 79(3), pages 669-707.
    11. Yannic Rehm & Lucas Chancel, 2022. "Measuring the Carbon Content of Wealth Evidence from France and Germany," PSE Working Papers halshs-03828939, HAL.
    12. Advani, Arun, 2021. "Missing Incomes in the UK : Evidence and Policy Implications," The Warwick Economics Research Paper Series (TWERPS) 1364, University of Warwick, Department of Economics.
    13. Vincent Geloso & Peter Lindert, 2020. "Relative costs of living, for richer and poorer, 1688–1914," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(3), pages 417-442, September.
    14. Stéphane Auray & Aurélien Eyquem & Bertrand Garbinti & Jonathan Goupille-Lebret, 2022. "Markups, Taxes, And Rising Inequality," Working Papers halshs-03832267, HAL.
    15. Kichko, Sergei & Picard, Pierre M., 2024. "Market size, income heterogeneity, and trade," Economics Letters, Elsevier, vol. 235(C).
    16. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    17. Aaberge, Rolf & Atkinson, Anthony B. & Modalsli, Jørgen, 2020. "Estimating long-run income inequality from mixed tabular data: Empirical evidence from Norway, 1875–2017," Journal of Public Economics, Elsevier, vol. 187(C).
    18. John Guyton & Patrick Langetieg & Daniel Reck & Max Risch & Gabriel Zucman, 2021. "Tax Evasion at the Top of the Income Distribution: Theory and Evidence," NBER Working Papers 28542, National Bureau of Economic Research, Inc.
    19. Jon Wisman, 2013. "The Growth Trap, Ecological Devastation, and the Promise of Guaranteed Employment," Challenge, Taylor & Francis Journals, vol. 56(2), pages 53-78.
    20. Wildauer, Rafael & Kapeller, Jakob, 2022. "Tracing the invisible rich: A new approach to modelling Pareto tails in survey data," Labour Economics, Elsevier, vol. 75(C).

    More about this item

    Keywords

    effective income tax rate; inequality; progressive income taxation; fiscal policy; fiscal inequality coefficient;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp10978. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.