The public choice of differing degrees of tax progressivity

There are a number of hypotheses developed in the literature for explaining the degree of public income redistribution that can be adapted to explain the degree of progressivity that a collectivity will chose. In some cases it is difficult to obtain easily measurable and unambiguous proxies for the theoretical proposition. Nevertheless our attempts to do so prove at least somewhat encouraging. We find strong support for the idea that positive attitudes toward risk taking, which Friedman believes lead to less public sector redistribution, also lead to the choice of less progressive tax structures. There is also evidence that the lack of excess burden from pursuing redistribution, encourages greater use as suggested by Becker. There is also some substantial evidence that higher income and educational levels, as suggested by a number of theories, lead to more progressivity. The results for hypotheses such as Peltzman's that predict strong association with certain characteristics of the income distribution are less favorable. The interpretation of the choice of regressive tax structures as special interest legislation confronts a mixture of results. Interpreted correctly the evidence may be consistent with the idea that certain political institutions do inhibit the passage of special interest legislation. Admittedly, this article is a crude first effort at explaining the degree of progressivity chosen by different political entities. At least it does reveal the existence of some empirical regularities that are consistent with already developed theories of public sector income redistribution. Hopefully it will inspire further attempts to understand the positive bases upon which societies base their choices of different degrees of tax progressivity. Copyright Martinus Nijhoff Publishers 1986