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Taxation, Reranking and Equivalence Scales

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  • Creedy, J.
  • van de Ven, J.

Abstract

This paper considers the relationship between equivalence scales and the reranking effects of taxation. The impact on reranking of varying an equivalence scale is divided into two effects. The first, referred to as the direct effect, increases reranking as the equivalence scale used departs from the scale that implicitly underlies the tax system. The second, referred to as the indirect effect, increases reranking as measures of adult equivalent income increase. It is argued that the equivalence scale that underlies a tax system is likely to be in the neighbourhood of the scale that minimises reranking Household data from Australia and the UK are analysed.

Suggested Citation

  • Creedy, J. & van de Ven, J., 2001. "Taxation, Reranking and Equivalence Scales," Department of Economics - Working Papers Series 782, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:782
    Note: This paper has now been published in: Creedy, J. and Van de Ven, J. (2005) Taxation, Reranking and Equivalence Scales, Bulletin of Economic Research, 57, no.1, pp. 13-36.
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    File URL: http://www.economics.unimelb.edu.au/research/2000-2001.html
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    Cited by:

    1. John Creedy & Jamas Enright & Norman Gemmell & Nick McNabb, 2008. "Equity and Efficiency Measures of Tax-Transfer Systems: Some Evidence for New Zealand," Treasury Working Paper Series 08/04, New Zealand Treasury.
    2. Bruce Headey, 2008. "Poverty Is Low Consumption and Low Wealth, Not Just Low Income," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(1), pages 23-39, October.
    3. John Creedy, 2011. "Tax and Transfer Tensions," Books, Edward Elgar Publishing, number 14603, March.
    4. Justin Ven & Nicolas Hérault & Francisco Azpitarte, 2017. "Identifying tax implicit equivalence scales," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(3), pages 257-275, September.
    5. Emanuela Raffinetti & Elena Siletti & Achille Vernizzi, 2015. "On the Gini coefficient normalization when attributes with negative values are considered," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 24(3), pages 507-521, September.
    6. Creedy, John, 2013. "Alternative Distributions for Inequality and Poverty Comparisons," Working Paper Series 18784, Victoria University of Wellington, Chair in Public Finance.
    7. John Creedy & Cath Sleeman, 2005. "Adult equivalence scales, inequality and poverty," New Zealand Economic Papers, Taylor & Francis Journals, vol. 39(1), pages 51-81.
    8. Creedy, John & Li, Shuyun May & Moslehi, Solmaz, 2010. "Inequality Aversion And The Optimal Composition Of Government Expenditure," Macroeconomic Dynamics, Cambridge University Press, vol. 14(S2), pages 290-306, November.
    9. Emanuela Raffinetti & Elena Siletti & Achille Vernizzi, 2017. "Analyzing the Effects of Negative and Non-negative Values on Income Inequality: Evidence from the Survey of Household Income and Wealth of the Bank of Italy (2012)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(1), pages 185-207, August.
    10. John Creedy, 2006. "Evaluating Policy: Welfare Weights And Value Judgements," Department of Economics - Working Papers Series 971, The University of Melbourne.
    11. John Creedy & Ross Guest, 2008. "Discounting and the Time Preference Rate," The Economic Record, The Economic Society of Australia, vol. 84(264), pages 109-127, March.
    12. Simone Pellegrino & Achille Vernizzi, 2013. "On measuring violations of the progressive principle in income tax systems," Empirical Economics, Springer, vol. 45(1), pages 239-245, August.
    13. Dongyub Lee & Sangwon Suh, 2025. "Measuring Income and Wealth Inequality: A Note on the Gini Coefficient for Samples with Negative Values," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 176(3), pages 947-965, February.
    14. Simone Pellegrino & Achille Vernizzi, 2010. "The 2007 Personal Income Tax Reform in Italy: Effects on Potential Equity, Horizontal Inequity and Re-ranking," Working papers 14, Former Department of Economics and Public Finance "G. Prato", University of Torino.

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    Keywords

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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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