The inequality effects of a dual income tax system
AbstractThe overall inequality effects of a dual income tax (DIT) system, combining progressive taxation of labor income with proportional taxation of income from capital, are investigated. Simple examples show that correlations between distributions of wage and capital income, the degree of tax rate differentiation in the DIT, and reranking of tax-payers can be expected to complicate the analysis. We trace out what can be said definitively, obtaining sufficient conditions for unambiguous inequality reduction and identifying the nature of the implicit redistribution between labor and capital income which is involved, with the help of Norwegian income tax data.
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 Research Department of Statistics Norway in its series Discussion Papers with number 663.
Date of creation: Sep 2011
Date of revision:
Personal income tax; dual income tax; redistributive effect;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-10-01 (Accounting & Auditing)
- NEP-ALL-2011-10-01 (All new papers)
- NEP-LTV-2011-10-01 (Unemployment, Inequality & Poverty)
- NEP-PBE-2011-10-01 (Public Economics)
- NEP-PUB-2011-10-01 (Public Finance)
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.:
- Pfahler, Wilhelm, 1990. "Redistributive Effect of Income Taxation: Decomposing Tax Base and Tax Rates Effects," Bulletin of Economic Research, Wiley Blackwell, vol. 42(2), pages 121-29, April.
- Fellman, J, 1976. "The Effect of Transformations on Lorenz Curves," Econometrica, Econometric Society, vol. 44(4), pages 823-24, July.
- Rietveld, Piet, 1990. "Multidimensional inequality comparisons : On aggravation and mitigation of inequalities," Economics Letters, Elsevier, vol. 32(2), pages 187-192, February.
- Thor O. Thoresen & Annette Alstadsæter, 2008.
"Shifts in organizational form under a dual income tax system,"
529, Research Department of Statistics Norway.
- Thor O. Thoresen & Annette Alstadsæter, 2010. "Shifts in Organizational Form under a Dual Income Tax System," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(4), pages 384-418, December.
- Thor Olav Thoresen & Annette Alstadsæter, 2008. "Shifts in Organizational Form under a Dual Income Tax System," CESifo Working Paper Series 2273, CESifo Group Munich.
- Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
- Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
- Erlend E. Bø & Peter J. Lambert & Thor O. Thoresen, 2011. "Horizontal inequity under a dual income tax system: principles and measurement," Discussion Papers 647, Research Department of Statistics Norway.
- Bernd Genser & Andreas Reutter, 2007.
"Moving Towards Dual Income Taxation in Europe,"
International Center for Public Policy Working Paper Series, at AYSPS, GSU
paper0717, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Valentino Dardanoni & Peter Lambert, 2001.
"Horizontal inequity comparisons,"
Social Choice and Welfare,
Springer, vol. 18(4), pages 799-816.
- Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard).
If references are entirely missing, you can add them using this form.