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The Distributive Effect of Expanding the Sales Tax

Author

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  • Lung-Fai Wong

    (Research Department, Minnesota House of Representatives)

  • Joel Michael

    (Research Department, Minnesota House of Representatives)

  • Doug Wilson

    (Research Department, Minnesota House of Representatives)

Abstract

This article examines the distributive effect of expanding the Minnesota sales tax Abstract base to include additional consumption items. Two indexes, Kakwani and the Suits, are calculated for the existing sales tax base and expansion options. The indexes consistently indicate that the existing tax base is regressive, as are the major base expansion items. Effective tax rates indicate that expanding the sales tax will widen the burden gap between low-income and high-income taxpayers. The aggregate property of the Kakwani and Suits indexes is used to examine the overall distributive effect of sales tax and other tax systems.

Suggested Citation

  • Lung-Fai Wong & Joel Michael & Doug Wilson, 1990. "The Distributive Effect of Expanding the Sales Tax," Public Finance Review, , vol. 18(4), pages 465-479, October.
    • Handle: RePEc:sae:pubfin:v:18:y:1990:i:4:p:465-479
    DOI: 10.1177/109114219001800406
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    References listed on IDEAS

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    4. Kienzle, Edward C, 1980. "Measurement of Tax Progressivity: Comment," American Economic Review, American Economic Association, vol. 70(1), pages 208-210, March.
    5. Pfahler, Wilhelm, 1987. "Redistributive Effects of Tax Progressivity: Evaluating a General Class of Aggregate Measures," Public Finance = Finances publiques, , vol. 42(1), pages 1-31.
    6. John B. Loomis & Charles F. Revier, 1988. "Measuring Regressivity of Excise Taxes: A Buyers Index," Public Finance Review, , vol. 16(3), pages 301-314, July.
    7. Davies, David G, 1980. "Measurement of Tax Progressivity: Comment," American Economic Review, American Economic Association, vol. 70(1), pages 204-207, March.
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    Cited by:

    1. Derrick, Frederick W. & Scott, Charles E., 1998. "Sales tax equity: Who bears the burden?," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(2), pages 227-237.

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