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Income Tax Progressivity: Trends and Implications

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  • Claudia Gerber
  • Alexander Klemm
  • Li Liu
  • Victor Mylonas

Abstract

This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pretax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. On this relationship, regressions do not reveal a significant impact, suggesting that efficiency costs may be small – at least for degrees of progressivity observed in the sample. Finally, the paper finds that increasing tax progressivity reduces pretax inequality.

Suggested Citation

  • Claudia Gerber & Alexander Klemm & Li Liu & Victor Mylonas, 2020. "Income Tax Progressivity: Trends and Implications," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(2), pages 365-386, April.
  • Handle: RePEc:bla:obuest:v:82:y:2020:i:2:p:365-386
    DOI: 10.1111/obes.12331
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    Cited by:

    1. Nanak Kakwani & Xiaobing Wang & Jing Xu & Ximing Yue, 2020. "Assessing the Social Welfare Effects of Government Transfer Programs: Some International Comparisons," LIS Working papers 786, LIS Cross-National Data Center in Luxembourg.

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