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Capital Gains Taxation And Progressivity

Author

Listed:
  • Julio López Laborda

    (Department of Public Economics, University of Zaragoza)

Abstract

This paper measures the local and effective progression of personal income tax, considering jointly the taxation of regular income and capital gains. The study demonstrates that, if capital gains increase more than proportionally compared to individuals’ regular income, the combined tax may be locally and effectively more progressive than the tax which is applied solely to regular income; however, post-tax income inequality will be lower in the latter case. The results obtained are used to design a flat tax to substitute the current personal income tax, obtaining the parameters –tax rate and deduction from the tax base– for that tax.

Suggested Citation

  • Julio López Laborda, "undated". "Capital Gains Taxation And Progressivity," Working Papers 1-06 Classification-JEL :, Instituto de Estudios Fiscales.
    • Handle: RePEc:hpe:wpaper:y:2006:i:1
    as

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    References listed on IDEAS

    as
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    5. Fellman, J, 1976. "The Effect of Transformations on Lorenz Curves," Econometrica, Econometric Society, vol. 44(4), pages 823-824, July.
    6. Alan J. Auerbach, 2006. "Who Bears the Corporate Tax? A Review of What We Know," NBER Chapters, in: Tax Policy and the Economy, Volume 20, pages 1-40, National Bureau of Economic Research, Inc.
    7. Anna Ivanova & Michael Keen & Alexander Klemm, 2005. "The Russian ‘flat tax’ reform [‘Income tax evasion: A theoretical analysis’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(43), pages 398-444.
    8. repec:bla:ecorec:v:75:y:1999:i:231:p:397-404 is not listed on IDEAS
    9. José María Arranz, "undated". "La Seguridad Del Empleo En España: Evidencia Con Datos De La Epa (1987-2003)," Working Papers 5-04 Classification-JEL :, Instituto de Estudios Fiscales.
    10. Rietveld, Piet, 1990. "Multidimensional inequality comparisons : On aggravation and mitigation of inequalities," Economics Letters, Elsevier, vol. 32(2), pages 187-192, February.
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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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