This paper considers the relationship between equivalence scales and the reranking effects of taxation. The impact on reranking of varying an equivalence scale is divided into two effects. The first, referred to as the direct effect, increases reranking as the equivalence scale used departs from the scale that implicitly underlies the tax system. The second, referred to as the indirect effect, increases reranking as measures of adult equivalent income increase. It is argued that the equivalence scale that underlies a tax system is likely to be in the neighbourhood of the scale that minimises reranking Household data from Australia and the UK are analysed. Note: This paper has now been published in: Creedy, J. and Van de Ven, J. (2005) Taxation, Reranking and Equivalence Scales, Bulletin of Economic Research, 57, no.1, pp. 13-36.
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Length: 32 pages Date of creation: 2001 Date of revision: Handle: RePEc:mlb:wpaper:782
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Find related papers by JEL classification: H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
References listed on IDEAS 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.:
Yitzhaki, Shlomo, 1983.
"On an Extension of the Gini Inequality Index,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-28, October.
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