Progressivity Effects of Structural Income Tax Reforms
AbstractThe theoretical analysis of tax progressivity has proceeded on the unrealistic assumption that tax liability is never zero, thereby precluding a systematic examination of the progressivity effects of such basic tax reforms as an increase in personal allowances. This paper extends the core results on progressivity to cover zero tax payments, and applies these new results to the analysis of allowances, deductions and credits. Log concavity of the tax schedule - a property quite distinct from any notion of progressivity - emerges as the critical determinant of whether liability progression rises uniformly as allowances are increased, and it is shown that any variation in average tax rates is sufficient to admit the possibility that residual progression is reduced by an increase in either allowances, income-related deductions, or tax credits.
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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9612.
Date of creation: Aug 1996
Date of revision:
Publication status: Published in Economic Journal, 2000, 110(460), pp.50-68
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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/
Other versions of this item:
- Michael Keen & Henry Papapanagos & Anthony Shorrocks, 1996. "Progressivity effects of structural income tax reforms," IFS Working Papers W96/17, Institute for Fiscal Studies.
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
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- Adam Wagstaff & Eddy van Doorslaer, 2001. "What Makes the Personal Income Tax Progressive? A Comparative Analysis for Fifteen OECD Countries," International Tax and Public Finance, Springer, vol. 8(3), pages 299-316, May.
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