A synthesis of local and effective tax progressivity measurement

Chakravarty, Satya R. and Sarkar, Palash (2022): A synthesis of local and effective tax progressivity measurement.

Abstract

This paper examines theoretical properties of local and global measures of income tax progressivity. In particular, consistency property of global measures with local measures is analyzed. Using a normative approach, an index of performance in effective progression underlying a tax system, in relation to that of a ‘norm’, is suggested and analyzed. The norm chosen here is the welfare level associated with the post-tax distribution resulting from an inequality minimizing taxation policy which maintains pre-tax rank orders of tax payers and does not impose any additional tax burden on them, given that the pre-tax distribution is fixed as well. As the actual post-tax welfare increases, effective progression (hence performance) improves, which ensures that it is possible to elevate the level of performance sequentially, as may be desired by a policy maker, towards achieving the norm welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: taxation; effective progression; inequality minimization; welfare; performance; policy
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies

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