Assessing the Performance of an Income Tax
AbstractAn indicator of the performance of a tax (and/or benefit) system in generating a high level of social welfare is proposed. Under standard assumptions on the form of the admissible social welfare functions, the indicator is shown to be increasing in the progressivity of the system. It is also increasing in the degree of aversion towards inequality when the tax system is progressive. Unlike most indices of tax progressivity, the indicator has the attractive feature of being an explicit function of the shape of social welfare preferences. Using household data from 1985 Britain, we then ask: (i) What can the performance of constant residual progression be? (ii) Relative to a proportional system, what is the performance of existing or proposed tax and benefit systems? (iii) How can we approximate the average residual progression of unevenly progressive tax and benefit systems?
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Bibliographic InfoPaper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 9402.
Date of creation: 1994
Date of revision:
Progressivity; redistribution; inequality; social welfare;
Other versions of this item:
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-05-25 (All new papers)
- NEP-PBE-1998-05-25 (Public Economics)
- NEP-PUB-1998-05-25 (Public Finance)
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- Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2000.
"Classical Horizontal Inequity and Reranking: an Integrated Approach,"
Cahiers de recherche, UniversitÃ© Laval - DÃ©partement d'Ã©conomique
0002, UniversitÃ© Laval - DÃ©partement d'Ã©conomique.
- Jean-Yves Duclos & Vincent Jalbert & Abdelkrim Araar, 2001. "Classical Horizontal Inequity and Reranking: an Integrated Approach," UFAE and IAE Working Papers 478.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Duclos, J.Y. & Jalbert, V. & Araar, A., 2000. "Classical Horizontal Inequity and Reranking: an Integrated Approach," Papers 0002, Laval - Recherche en Politique Economique.
- Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2003. "Classical Horizontal Inequity and Reranking: an Integrating Approach," Cahiers de recherche 0306, CIRPEE.
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