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Dual Income Taxation: A Promising Path to Tax Reform for Developing Countries

  • Bird, Richard M.
  • Zolt, Eric M.

The dual income tax combines a progressive tax on labor income and a lower flat tax on income from capital. Unlike flat tax systems, a dual income tax provides developing countries greater flexibility in addressing tax competition while retaining progressivity. Countries could use the move to a dual income tax system not just as an opportunity to rationalize the taxation of income from business operations and investment but also as a vehicle for broader reform of their tax systems.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 10 ()
Pages: 1691-1703

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:10:p:1691-1703
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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