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Did Tax Reform Reduce Actual US Progressivity? Evidence from the Taxpayer Compliance Measurement Program

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  • John Bishop
  • K. Chow
  • John Formby
  • Chih-Chin Ho

Abstract

Micro data from audited tax returns are used to evaluatechanges in the actual progressitivity of U.S. federal incometaxes in 1979 and 1988, which is distinct from apparent progressivity.Statistical inference methods are applied to global measuresof both actual and apparent residual and liability progression.The analysis reveals an absence of change in the overall levelof actual residual progressivity, but statistically significantdeclines in actual liability progression. The results indicatethat in assessing overall tax progression it is important totake sampling errors into account and that measures of actualtax progressivity can deviate significantly from apparent progressivity. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • John Bishop & K. Chow & John Formby & Chih-Chin Ho, 1997. "Did Tax Reform Reduce Actual US Progressivity? Evidence from the Taxpayer Compliance Measurement Program," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(2), pages 177-197, May.
    • Handle: RePEc:kap:itaxpf:v:4:y:1997:i:2:p:177-197
    DOI: 10.1023/A:1008642421345
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    2. Thor O. Thoresen, 2004. "Reduced Tax Progressivity in Norway in the Nineties: The Effect from Tax Changes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(4), pages 487-506, August.
    3. André DECOSTER & Guy VAN CAMP, 2000. "Redistributive Effects of the Shift from Personal Income Taxes to Indirect Taxes: Belgium 1988-1993," Working Papers of Department of Economics, Leuven ces0007, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    4. Bargain, Olivier & Dolls, Mathias & Immervoll, Herwig & Neumann, Dirk & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian, 2011. "Tax Policy and Income Inequality in the U.S., 1978-2009: A Decomposition Approach," IZA Discussion Papers 5910, Institute of Labor Economics (IZA).
    5. André Decoster & Isabelle Standaert & Christian Valenduc & Guy Van Camp, 2002. "What makes personal income taxes progressive? The case of Belgium," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 45(3), pages 91-112.
    6. Thor O. Thoresen & Zhiyang Jia & Peter J. Lambert, 2016. "Is there More Redistribution Now? A Review of Methods for Evaluating Tax Redistributional Effects," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(3), pages 302-333, September.
    7. Thor O. Thoresen & Zhiyang Jia & Peter J. Lambert, 2013. "Distributional benchmarking in tax policy evaluations," Discussion Papers 765, Statistics Norway, Research Department.
    8. Thor O. Thoresen & Erlend E. Bø & Erik Fjærli & Elin Halvorsen, 2012. "A Suggestion for Evaluating the Redistributional Effects of Tax Changes: With an Application to the 2006 Norwegian Tax Reform," Public Finance Review, , vol. 40(3), pages 303-338, May.
    9. André Decoster & Erwin Ooghe, 2002. "Weighting with individuals, equivalent individuals, or not weighting at all. Does it matter empirically?," Public Economics Working Paper Series ces0215, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    10. Peter Lambert & Thor Thoresen, 2009. "Base independence in the analysis of tax policy effects: with an application to Norway 1992–2004," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(2), pages 219-252, April.

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