Income Tax Progressivity: Trends and Implications. (10th August 2019)

• Record Type: Journal Article
• Authors: Gerber, Claudia; Klemm, Alexander; Liu, Li; Mylonas, Victor
• Is Part Of: Oxford bulletin of economics and statistics. Volume 82:Number 2(2020)
• Page Start: 365
• Page End: 386
• Publication Date: 2019-08-10
• Subjects: Economic history -- Periodicals; Great Britain -- Economic conditions -- Periodicals; 330.9
• DOI: 10.1111/obes.12331
• Languages: English
• ISSNs: 0305-9049

Abstract

Abstract: This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pretax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. On this relationship, regressions do not reveal a significant impact, suggesting that efficiency costs may be small – at least for degrees of progressivity observed in the sample. Finally, the paper finds that increasing tax progressivity reduces pretax inequality.