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Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency

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  • Creedy, John

Abstract

This paper is concerned with comparisons between alternative tax and transfer systems. Using 'target efficiency' measures where the objective is the alleviation of poverty, means testing is preferred. However, the desire to reduce inequality usually leads to a preference for universal transfer systems such as the linear income tax. The present paper provides comparisons of social welfare (using an abbreviate welfare function) for schemes which imply the same degree of poverty (using several poverty measures). It was found that means-testing dominates if the headcount poverty measure is used, otherwise the linear tax dominates. Copyright 1996 by The London School of Economics and Political Science.

Suggested Citation

  • Creedy, John, 1996. "Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency," Economica, London School of Economics and Political Science, vol. 63(250), pages 163-174, Suppl..
  • Handle: RePEc:bla:econom:v:63:y:1996:i:250:p:s163-74
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    Cited by:

    1. Christophe Muller & Sami Bibi, 2006. "Focused Targeting against Poverty Evidence from Tunisia," IDEP Working Papers 0602, Institut d'economie publique (IDEP), Marseille, France, revised Apr 2006.
    2. Christophe Muller, "undated". "Anti-Poverty Transfers without Riots in Tunisia," Discussion Papers 07/06, University of Nottingham, CREDIT.
    3. Van der Linden, Bruno, 1999. "Active Citizen's Income, Unconditional Income and Participation under Imperfect Competition: A Normative Analysis," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Duclos, Jean-Yves & Tabi, Martin, 1999. "Inégalité et redistribution du revenu, avec une application au Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 95-122, mars-juin.
    5. Jean-Yves Duclos, 2000. "Gini Indices and the Redistribution of Income," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(2), pages 141-162, March.
    6. Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, vol. 83(1), pages 109-140, May.
    7. Aya Abe, 2001. "Universalism and Targeting: An International Comparison using the LIS database," LIS Working papers 288, LIS Cross-National Data Center in Luxembourg.
    8. Bibi Sami, 2003. "On the Impact of Better Targeted Transfers on Poverty in Tunisia," Review of Middle East Economics and Finance, De Gruyter, vol. 1(1), pages 17-35, January.
    9. Christophe Muller, "undated". "Anti-Poverty Transfers and Spatial Prices in Tunisia," Discussion Papers 08/13, University of Nottingham, CREDIT.
    10. Rebekah Burroway & David Brady, 2010. "Targeting, Universalism and Single Mother Poverty: A Multi-level Analysis Across 18 Affluent Democracies," LIS Working papers 554, LIS Cross-National Data Center in Luxembourg.
    11. Christophe MULLER & Sami BIBI, 2008. "Focused Transfer Targeting against Poverty Evidence from Tunisia," THEMA Working Papers 2008-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    12. David S. Salkever & Stephen Johnston & Mustafa C. Karakus & Nicholas Ialongo & Eric Slade, 2006. "Using Target Efficiency to Select Program Participants and Risk-Factor Models: An Application to Child Mental Health Interventions for Preventing Future Crime," NBER Working Papers 12377, National Bureau of Economic Research, Inc.
    13. Tom Kornstad & Thor O. Thoresen, 2004. "Means-Testing the Child Benefit," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 29-49, March.
    14. Sami Bibi, 2001. "Comparing Effects of General Subsidies and Targeted Transfers on Poverty: Robustness Analysis Using Data Set from Tunisia," Working Papers 0125, Economic Research Forum, revised 09 Jun 2001.
    15. David Brady & Rebekah Burroway, 2012. "Targeting, Universalism, and Single-Mother Poverty: A Multilevel Analysis Across 18 Affluent Democracies," Demography, Springer;Population Association of America (PAA), vol. 49(2), pages 719-746, May.
    16. Rosanna Scutella, 2004. "Moves to a Basic Income-Flat Tax System in Australia: Implications for the Distribution of Income and Supply of Labour," Melbourne Institute Working Paper Series wp2004n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    17. Alari Paulus, 2016. "The antipoverty performance of universal and means-tested benefits with costly take-up," ImPRovE Working Papers 16/12, Herman Deleeck Centre for Social Policy, University of Antwerp.

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