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Lifetime vs Annual Tax-Transfer Incidence: How Much Less Progressive?


  • Harding, Ann


Annual fiscal incidence studies have found that income taxes and cash transfers are highly progressive and that their net effect is to redistribute income from rich to poor. Yet many argue that such studies overstate the redistribution achieved by governments and that lifetime analysis is needed. New results suggest that both income taxes and cash transfers are progressive on a lifetime basis, although they are much less progressive than annual studies suggest. The Australian tax-transfer system thus generates some lifetime redistribution from rich to poor, while also enforcing intrapersonal redistribution across the life cycle of individuals. Copyright 1993 by The Economic Society of Australia.

Suggested Citation

  • Harding, Ann, 1993. "Lifetime vs Annual Tax-Transfer Incidence: How Much Less Progressive?," The Economic Record, The Economic Society of Australia, vol. 69(205), pages 179-191, June.
  • Handle: RePEc:bla:ecorec:v:69:y:1993:i:205:p:179-91

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    References listed on IDEAS

    1. Martin Eichenbaum & Charles L. Evans, 1995. "Some Empirical Evidence on the Effects of Shocks to Monetary Policy on Exchange Rates," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 975-1009.
    2. Matthew D. Shapiro, 1986. "The Dynamic Demand for Capital and Labor," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 513-542.
    3. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics 9622, Faculty of Economics, University of Cambridge.
    4. Glenn D. Rudebusch, 1995. "What are the lags in monetary policy?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue feb3.
    5. repec:crs:wpaper:9645 is not listed on IDEAS
    6. David Gruen & Geoffrey Shuetrim, 1994. "Internationalisation and the Macroeconomy," RBA Annual Conference Volume,in: Philip Lowe & Jacqueline Dwyer (ed.), International Intergration of the Australian Economy Reserve Bank of Australia.
    7. Tro Kortian & James O’Regan, 1996. "Australian Financial Market Volatility: An Exploration of Cross-country and Cross-market Linkages," RBA Research Discussion Papers rdp9609, Reserve Bank of Australia.
    8. Stephen Grenville, 1996. "Recent Developments in Monetary Policy: Australia and Abroad," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(1), pages 29-39.
    9. Gordon de Brouwer & John Romalis, 1996. "External Influences on Output: An Industry Analysis," RBA Research Discussion Papers rdp9612, Reserve Bank of Australia.
    10. Philip Lowe, 1995. "The Link between the Cash Rate and Market Interest Rates," RBA Research Discussion Papers rdp9504, Reserve Bank of Australia.
    11. Nicolas de Roos & Bill Russell, 1996. "Towards an Understanding of Australia’s Co-movement with Foreign Business Cycles," RBA Research Discussion Papers rdp9607, Reserve Bank of Australia.
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    Cited by:

    1. Julian Lamont, 2008. "Incentives and reflective equilibrium in distributive justice debates," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 2(1), pages 5-19, November.
    2. Nelissen, Jan H. M., 1998. "Annual versus lifetime income redistribution by social security," Journal of Public Economics, Elsevier, vol. 68(2), pages 223-249, May.
    3. Robert E. Goodin & Bruce Headey & Ruud Muffels, 1997. "Poverty, Inequality, and Income Redistribution in the 'Three Worlds of Welfare Capitalism: United States, Germany, and the Netherlands, 1985 to 1989," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(1), pages 92-101.
    4. Rebecca Cassells & Ann Harding & Simon Kelly, 2006. "Problems and Prospects for Dynamic Microsimulation: A review and lessons for APPSIM," NATSEM Working Paper Series 63, University of Canberra, National Centre for Social and Economic Modelling.
    5. Bruce Headey & Robert Goodin & Ruud Muffels & Henk-Jan Dirven, 2000. "Is There a Trade-Off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of `The Three Worlds of Welfare Capitalism’," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 50(2), pages 115-157, May.

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