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Progressivity Versus A Flat Tax Rate In Combating Social Inequality?

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  • Alina - Georgeta AILINCA

    (“Victor Slavescu” Financial and Monetary Research Center, Romanian Academy, Romania)

Abstract

On the automatic stabilization capabilities of the progressive tax regimes much has been written and argued. Equally, the flat tax rate has often been indicated as a promoter and stimulator of business, but also as a factor for the perpetuation and widening of social inequalities. Therefore, the article reproduces some of the themes of previous articles trying to discern between the qualities and defects of the two types of taxation regimes: progressive or single quota. The empirical analysis on the data gathered for the EU28 countries following the two tax regimes is interesting and surprising and deserves further reflection. This analysis supports the results shown in the literature on progressive tax regimes, but equally points to a number of key tax elements that use the flat tax rate, investigating whether or not it acts as a regressive tax by its effect on the Gini coefficient.

Suggested Citation

  • Alina - Georgeta AILINCA, 2019. "Progressivity Versus A Flat Tax Rate In Combating Social Inequality?," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 4(3), pages 39-46.
    • Handle: RePEc:brc:brccej:v:4:y:2019:i:3:p:39-46
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    References listed on IDEAS

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    1. Peter, Klara Sabirianova & Buttrick, Steve & Duncan, Denvil, 2010. "Global Reform of Personal Income Taxation, 1981–2005: Evidence From 189 Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(3), pages 447-478, September.
    2. Flaviu Mihaescu & Liviu Voinea, 2009. "The Impact of the Flat Tax Reform on Inequality: The Case of Romania," wiiw Balkan Observatory Working Papers 81, The Vienna Institute for International Economic Studies, wiiw.
    3. Voinea, Liviu & Mihaescu, Flaviu, 2009. "The Impact of the Flat Tax Reform on Inequality - the case of Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 19-41, December.
    4. Denvil Duncan & Klara Sabirianova Peter, 2016. "Unequal inequalities: Do progressive taxes reduce income inequality?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 762-783, August.
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    More about this item

    Keywords

    automatic stabilization; EU28; social inequality;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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