Personal Income Tax Progressivity: Trends and Implications

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 pre-tax 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. Regressions do not reveal a significant impact of progressivity on growth, suggesting that efficiency costs of progressivity may be small—at least for degrees of progressivity observed in the sample.
Publication date: November 2018
ISBN: 9781484383087
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Progressivity , Growth , Personal Income Tax , Tax Wedge , Inequality , Progressivity , Growth , Personal Income Tax , Tax Wedge , Inequality , Household

Summary