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Redistributive effects in a dual income tax system

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  • Arnaldur Sölvi Kristjánsson

    () (University of Iceland)

Abstract

Equity issues of the dual income tax have been left aside in the field of economics. Since a dual income tax needs different modelling than a comprehensive one this paper offers firstly a quantitative framework to measure redistributive effects; it turns out that this involves both direct and indirect effects. The effects of horizontal inequity and re-ranking are also incorporated into the decomposition analysis. The approach is applicable using available income and tax statistics. Secondly, partial effects of changes in tax parameters are presented; they are channelled through the direct and indirect effects; and are not always straightforward.

Suggested Citation

  • Arnaldur Sölvi Kristjánsson, 2010. "Redistributive effects in a dual income tax system," Working Papers 187, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2010-187
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2010-187.pdf
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    References listed on IDEAS

    as
    1. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, pages 3-71.
    2. Boadway, Robin, 2005. "Income tax reform for a globalized world: The case for a dual income tax," Journal of Asian Economics, Elsevier, pages 910-927.
    3. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, pages 3-71.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    redistributive effect; progressivity; dual income tax.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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