Samuel Calonge () (CREB, Dpt. of Econometrics, Statistics and Spanish Economy, Universitat de Barcelona) Oriol Tejada () (Dpt. of Actuarial, Financial and Economic Mathematics, Universitat de Barcelona)
Abstract
We extend the linear reforms introduced by Pf¨ahler (1984) to the case of dual taxes. We study the relative effect that linear dual tax cuts have on the inequality of income distribution -a symmetrical study can be made for dual linear tax hikes-. We also introduce measures of the degree of progressivity for dual taxes and show that they can be connected to the Lorenz dominance criterion. Additionally, we study the tax liability elasticity of each of the reforms proposed. Finally, by means of a microsimulation model and a considerably large data set of taxpayers drawn from 2004 Spanish Income Tax Return population, 1) we compare different yield-equivalent tax cuts applied to the Spanish dual income tax and 2) we investigate how much income redistribution the dual tax reform (Act ‘35/2006’) introduced with respect to the previous tax.
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Publisher Info
Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number
XREAP2009-1.
Length: 45 pages Date of creation: Feb 2009 Date of revision:
Feb 2009 Handle: RePEc:xrp:wpaper:xreap2009-1
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