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

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

Abstract

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.

Suggested Citation

  • Bird, Richard M. & Zolt, Eric M., 2011. "Dual Income Taxation: A Promising Path to Tax Reform for Developing Countries," World Development, Elsevier, vol. 39(10), pages 1691-1703.
  • Handle: RePEc:eee:wdevel:v:39:y:2011:i:10:p:1691-1703
    DOI: 10.1016/j.worlddev.2011.04.008
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    References listed on IDEAS

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    Cited by:

    1. Jorge Martinez-Vazquez & Richard M. Bird, 2014. "Sustainable development requires a good tax system," Chapters,in: Taxation and Development: The Weakest Link?, chapter 1, pages 1-24 Edward Elgar Publishing.
    2. Richard M. Bird & Eric M. Zolt, 2014. "Taxation and inequality in the Americas: Changing the fiscal contract?," Chapters,in: Taxation and Development: The Weakest Link?, chapter 7, pages 193-237 Edward Elgar Publishing.
    3. Richard M. Bird, 2014. "Foreign advice and tax policy in developing countries," Chapters,in: Taxation and Development: The Weakest Link?, chapter 4, pages 103-144 Edward Elgar Publishing.

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