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Evaluating Alternative Tax and Transfer Schemes with Endogenous Earnings

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  • Creedy, John

Abstract

This paper compares a linear income tax with a modified minimum income guarantee that uses means testing. The schemes are evaluated in terms of both their ability to reduce poverty and their influence on social welfare (defined in terms of individuals' utilities). The comparisons involve a lexicographic approach whereby poverty reduction is regarded as the primary objective. Using a range of poverty measures and social welfare functions, simulations show that the linear income tax dominates the minimum income guarantee. Copyright 1997 by Royal Economic Society.

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  • Creedy, John, 1997. "Evaluating Alternative Tax and Transfer Schemes with Endogenous Earnings," Oxford Economic Papers, Oxford University Press, vol. 49(1), pages 43-56, January.
    • Handle: RePEc:oup:oxecpp:v:49:y:1997:i:1:p:43-56
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    Cited by:

    1. John Creedy, 1997. "Labour Supply and Social Welfare when Utility Depends on a Threshold Consumption Level," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 159-168, June.
    2. Brennan Thompson, 2012. "Flat rate taxes and relative poverty measurement," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(3), pages 543-551, March.
    3. Ewa Aksman, 2015. "To What Extent Do Social Benefits and Income Tax Alter Income Distribution in Poland?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 41.
    4. Knoblauch, Vicki, 2000. "Lexicographic orders and preference representation," Journal of Mathematical Economics, Elsevier, vol. 34(2), pages 255-267, October.
    5. Constantine Angyridis & Brennan Scott Thompson, 2016. "Negative income taxes, inequality and poverty," Canadian Journal of Economics, Canadian Economics Association, vol. 49(3), pages 1016-1034, August.
    6. Ewa Aksman, 2010. "Znaczenie podatku netto w Polsce dla zróżnicowania dochodów," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1-2, pages 35-50.
    7. Rosanna Scutella, 2004. "Moves to a Basic Income-Flat Tax System in Australia: Implications for the Distribution of Income and Supply of Labour," Melbourne Institute Working Paper Series wp2004n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Alari Paulus, 2016. "The antipoverty performance of universal and means-tested benefits with costly take-up," ImPRovE Working Papers 16/12, Herman Deleeck Centre for Social Policy, University of Antwerp.

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