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Measuring Tax Progressivity: Compatible Global and Local Indexes

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  • Sandy Baum

    (Skidmore College)

Abstract

This paper analyzes two complementary measures of tax progressivity. Relative Share Adjustment (RSA) is the ratio of after-tax to before-tax shares of income for particular groups. RSA g , a global measure, is the log of RSA averaged over all groups, weighted by group population. It is equal to the absolute change in inequality resulting from the tax, as measured by Theil's index of income inequality. Values for the indexes are computed through application of alternative tax functions to simulated lognormal income distributions. The results highlight the contrasts in the distributional effects of different tax structures of similar overall progressivity.

Suggested Citation

  • Sandy Baum, 1998. "Measuring Tax Progressivity: Compatible Global and Local Indexes," Public Finance Review, , vol. 26(5), pages 447-459, September.
    • Handle: RePEc:sae:pubfin:v:26:y:1998:i:5:p:447-459
    DOI: 10.1177/109114219802600502
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    References listed on IDEAS

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    1. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
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    Cited by:

    1. Jin Kwon Hyun & Byung Lim, 2004. "Comparative Analysis of the Effective Income Tax Function: Empirical Evidence using LIS Data," LIS Working papers 369, LIS Cross-National Data Center in Luxembourg.

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