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A Differential Redistributive Analysis of Bilinear Dual-Income-Tax Reforms

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  • Samuel Calonge
  • Oriol Tejada

Abstract

We analyze differential redistributive effects of bilinear tax reforms that are applied to dual income taxes or, more generally, to two different one-dimensional taxes. To do so we analyze the one-dimensional income tax case, and then we introduce a partial order, based on the Lorenz dominance criterion, which induces a lattice structure within the set of bilinear tax reforms whenever certain conditions on the tax reform policies and the dual income distribution hold. We illustrate this result empirically in the case of the Spanish dual personal income tax. We also analyze voting preferences and revenue elasticities, and we discuss the robustness of our theoretical predictions when some assumptions of the model are weakened.

Suggested Citation

  • Samuel Calonge & Oriol Tejada, 2011. "A Differential Redistributive Analysis of Bilinear Dual-Income-Tax Reforms," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(3), pages 193-224, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201109)67:3_193:adraob_2.0.tx_2-c
    DOI: 10.1628/001522108X600560
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    References listed on IDEAS

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    1. Fries, Albert & Hutton, John P & Lambert, Peter J, 1982. "The Elasticity of the U.S. Individual Income Tax: Its Calculation, Determinants and Behavior," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 147-151, February.
    2. José Labeaga & Xisco Oliver & Amedeo Spadaro, 2008. "Discrete choice models of labour supply, behavioural microsimulation and the Spanish tax reforms," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(3), pages 247-273, September.
    3. Samuel Calonge & Oriol Tejada, 2009. "A theoretical and practical study on linear reforms of dual taxes," Working Papers XREAP2009-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Feb 2009.
    4. Ebert, Udo & Lambert, Peter J, 1999. "Combined Income Taxes and Tax-Benefit Systems," The Economic Record, The Economic Society of Australia, vol. 75(231), pages 397-404, December.
    5. Hutton, John P. & Lambert, Peter J., 1979. "Income tax progressivity and revenue growth," Economics Letters, Elsevier, vol. 3(4), pages 377-380.
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    7. Moyes, Patrick & Shorrocks, Anthony, 1998. "The impossibility of a progressive tax structure," Journal of Public Economics, Elsevier, vol. 69(1), pages 49-65, July.
    8. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
    9. John P. Formby & W. James Smith & Paul D. Thistle, 1992. "On the Definition of Tax Neutrality: Distributional and Welfare Implications of Policy Alternatives," Public Finance Review, , vol. 20(1), pages 3-23, January.
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    Cited by:

    1. Arnaldur Kristjánsson & Peter Lambert, 2015. "Structural progression measures for dual income tax systems," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(1), pages 1-15, March.
    2. Lambert Peter J. & Thoresen Thor O., 2012. "The Inequality Effects of a Dual Income Tax System," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-17, July.

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    More about this item

    Keywords

    dual taxes; bilinear tax reforms; Lorenz domination; lattice;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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