IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v32y2004i4p426-440.html
   My bibliography  Save this article

Horizontal Equity and Progression When Equivalence Scales Are Not Constant

Author

Listed:
  • Udo Ebert

    (University of Oldenburg, Germany)

  • Peter J. Lambert

    (University of Oregon)

Abstract

Household needs must be taken into account when designing an equitable income tax. In this article, the authors are concerned with the use of equivalence scales to achieve horizontal equity. Equivalence scales may be relative or absolute, constant or income-varying. If the equivalence scale is independent of income, horizontal equity is achieved by a form of income splitting (the relative case) or the use of exemptions (the absolute case). However, once one allows the equivalence scale to vary with income, the distinction between relative and absolute scales all but disappears (because one can adjust one form to imitate the other), but a new complication arises because scale values may differ at before and after tax income levels. The authors explore various possible criteria for horizontal equity in this scenario and their implications for vertical equity. In particular, the authors articulate an “equal progression among equals†criterion and showittobe achievable along with horizontal equity under specified conditions.

Suggested Citation

  • Udo Ebert & Peter J. Lambert, 2004. "Horizontal Equity and Progression When Equivalence Scales Are Not Constant," Public Finance Review, , vol. 32(4), pages 426-440, July.
    • Handle: RePEc:sae:pubfin:v:32:y:2004:i:4:p:426-440
    DOI: 10.1177/1091142104264422
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1091142104264422
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1091142104264422?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:bla:econom:v:64:y:1997:i:254:p:233-44 is not listed on IDEAS
    2. Donaldson, D. & Pendakur, K., 1999. "Equivalent-Income Functions and Income-Dependent Equivalence Scales," Discussion Papers dp99-8, Department of Economics, Simon Fraser University.
    3. Ebert, Udo & Moyes, Patrick, 2000. "Consistent Income Tax Structures When Households Are Heterogeneous," Journal of Economic Theory, Elsevier, vol. 90(1), pages 116-150, January.
    4. Udo Ebert & Peter J. Lambert, 2004. "Horizontal Equity and Progression When Equivalence Scales Are Not Constant," Public Finance Review, , vol. 32(4), pages 426-440, July.
    5. repec:bla:revinw:v:38:y:1992:i:4:p:429-43 is not listed on IDEAS
    6. Seneca, Joseph J & Taussig, Michael K, 1971. "Family Equivalence Scales and Personal Income Tax Exemptions for Children," The Review of Economics and Statistics, MIT Press, vol. 53(3), pages 253-262, August.
    7. Lambert, Peter J. & Yitzhaki, Shlomo, 1997. "Income tax credits and exemptions," European Journal of Political Economy, Elsevier, vol. 13(2), pages 343-351, May.
    8. Udo Ebert & Peter J. Lambert, 1999. "Combined Income Taxes and Tax‐Benefit Systems," The Economic Record, The Economic Society of Australia, vol. 75(4), pages 397-404, December.
    9. repec:bla:ecorec:v:75:y:1999:i:231:p:397-404 is not listed on IDEAS
    10. Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 619-640, December.
    11. Denis Conniffe, 1992. "The Non‐Constancy Of Equivalence Scales," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(4), pages 429-443, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bönke, Timm & Eichfelder, Sebastian, 2008. "Horizontale Gleichheit im Abgaben-Transfersystem: eine Analyse äquivalenter Einkommen von Arbeitnehmern in Deutschland," arqus Discussion Papers in Quantitative Tax Research 36, arqus - Arbeitskreis Quantitative Steuerlehre.
    2. Arnaldur Kristjánsson & Peter Lambert, 2015. "Structural progression measures for dual income tax systems," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(1), pages 1-15, March.
    3. John Muellbauer & Justin van de Ven, 2004. "Estimating Equivalence Scales for Tax and Benefits Systems," Economics Papers 2004-W06, Economics Group, Nuffield College, University of Oxford.
    4. Justin Ven & Nicolas Hérault & Francisco Azpitarte, 2017. "Identifying tax implicit equivalence scales," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(3), pages 257-275, September.
    5. Udo Ebert & Peter J. Lambert, 2004. "Horizontal Equity and Progression When Equivalence Scales Are Not Constant," Public Finance Review, , vol. 32(4), pages 426-440, July.
    6. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    7. Justin van de Ven & Nicolas Herault & Francisco Azpitarte, 2014. "Identifying Tax Implicit Equivalence Scales," Melbourne Institute Working Paper Series wp2014n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    9. repec:old:wpaper:331 is not listed on IDEAS
    10. Luis Ayala & Rosa Martínez & Jesús Ruiz Huerta, 2003. "Equivalence scales in tax and transfer policies," Investigaciones Economicas, Fundación SEPI, vol. 27(3), pages 593-614, September.
    11. Achille VERNIZZI & Maria Giovanna MONTI & Marek KOSNY, 2006. "An overall inequality reducing and horizontally equitable tax system with application to Polish data," Departmental Working Papers 2006-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    12. Luis José Imedio Olmedo & Encarnación Macarena Parrado Gallardo & María Dolores Sarrión Gavilán, 2005. "Horizontal equity, equal progression: an utilitarian approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 174(3), pages 87-115, September.
    13. repec:zbw:hohpro:331 is not listed on IDEAS
    14. Peter J. Lambert, 2007. "Positional equity and equal sacrifice: design principles for an EU-wide income tax?," Working Papers 0706, University of Otago, Department of Economics, revised Apr 2007.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Achille VERNIZZI & Maria Giovanna MONTI & Marek KOSNY, 2006. "An overall inequality reducing and horizontally equitable tax system with application to Polish data," Departmental Working Papers 2006-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Dr Justin van de Ven, 2004. "Estimating Equivalence Scales for Tax and Benefits Systems," National Institute of Economic and Social Research (NIESR) Discussion Papers 229, National Institute of Economic and Social Research.
    3. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    4. Luis José Imedio Olmedo & Encarnación Macarena Parrado Gallardo & María Dolores Sarrión Gavilán, 2005. "Horizontal equity, equal progression: an utilitarian approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 174(3), pages 87-115, September.
    5. repec:zbw:hohpro:331 is not listed on IDEAS
    6. Bönke, Timm & Eichfelder, Sebastian, 2008. "Horizontale Gleichheit im Abgaben-Transfersystem: eine Analyse äquivalenter Einkommen von Arbeitnehmern in Deutschland," arqus Discussion Papers in Quantitative Tax Research 36, arqus - Arbeitskreis Quantitative Steuerlehre.
    7. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    8. repec:old:wpaper:331 is not listed on IDEAS
    9. Timm Bönke & Sebastian Eichfelder, 2010. "Horizontal Equity in the German Tax-Benefit System: A Simulation Approach for Employees," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(3), pages 295-331, September.
    10. Udo Ebert, 2008. "Living Standard, Social Welfare, and the Redistribution of Income in a Heterogeneous Population," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 873-889, October.
    11. Peter J. Lambert, 2007. "Positional equity and equal sacrifice: design principles for an EU-wide income tax?," Working Papers 0706, University of Otago, Department of Economics, revised Apr 2007.
    12. Justin van de Ven & Nicolas Herault & Francisco Azpitarte, 2014. "Identifying Tax Implicit Equivalence Scales," Melbourne Institute Working Paper Series wp2014n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    13. Justin Ven & Nicolas Hérault & Francisco Azpitarte, 2017. "Identifying tax implicit equivalence scales," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(3), pages 257-275, September.
    14. Bönke, Timm & Eichfelder, Sebastian & Utz, Stephen, 2012. "Uneven treatment of family life? Horizontal equity in the U.S. tax and transfer system," Discussion Papers 2012/18, Free University Berlin, School of Business & Economics.
    15. Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 619-640, December.
    16. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    17. Christian Seidl, 2002. "The over-generous boon: Tax splitting in Germany," Journal of Economics, Springer, vol. 9(1), pages 241-260, December.
    18. Carbonell-Nicolau, Oriol & Llavador, Humberto, 2018. "Inequality reducing properties of progressive income tax schedules: the case of endogenous income," Theoretical Economics, Econometric Society, vol. 13(1), January.
    19. Olivier Bargain & Olivier Donni & Monnet Gbakou, 2010. "The Measurement of Child Costs: Evidence from Ireland," The Economic and Social Review, Economic and Social Studies, vol. 41(1), pages 1-20.
    20. J. L. Nicholson, 1976. "Appraisal Of Different Methods Of Estimating Equivalence Scales And Their Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 22(1), pages 1-11, March.
    21. Molana , Hassan & Rahimi , Abolfazl, 2014. "Should all Iranian Citizens Receive the Same Subsidy Rebate?," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(3), pages 1-31, April.

    More about this item

    Keywords

    horizontal equity; progression; needs; equivalence scales; income tax;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:32:y:2004:i:4:p:426-440. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.