IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v52y2020i2p175-194.html
   My bibliography  Save this article

Feasible smooth income tax schedules: benefits and distributional implications

Author

Listed:
  • D. Estévez Schwarz
  • E. Sommer

Abstract

Existing tax schedules are often overly complex and characterized by discontinuities in the marginal tax burden. In this paper, we propose a class of progressive smooth functions to replace personal income tax schedules. These functions depend only on three meaningful parameters, and avoid the drawbacks associated with defining tax schedules through various tax brackets. Based on representative micro data, we derive revenue-neutral parameters for four different types of tax regimes (Austria, Germany, Hungary and Spain). We then analyze the possible implications of a hypothetical switch to smoother income tax tariffs. It turns that smooth tax functions are convenient to eliminate bracket creep, while aggregate income inequality is uniformly reduced to a small extent.

Suggested Citation

  • D. Estévez Schwarz & E. Sommer, 2020. "Feasible smooth income tax schedules: benefits and distributional implications," Applied Economics, Taylor & Francis Journals, vol. 52(2), pages 175-194, January.
  • Handle: RePEc:taf:applec:v:52:y:2020:i:2:p:175-194
    DOI: 10.1080/00036846.2019.1638500
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2019.1638500
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00036846.2019.1638500?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:52:y:2020:i:2:p:175-194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.