IDEAS home Printed from https://ideas.repec.org/a/spr/empeco/v45y2013i1p239-245.html
   My bibliography  Save this article

On measuring violations of the progressive principle in income tax systems

Author

Listed:
  • Simone Pellegrino
  • Achille Vernizzi

Abstract

Kakwani and Lambert (Eur J Polit Econ 14(2):369–380, 1998 ) state three axioms which should be respected by an equitable tax system. Using the Atkinson–Plotnick–Kakwani re-ranking indexes of taxes, tax rates, and post-tax incomes, calculated with respect to the ranking of pre-tax income distribution, they then propose a measurement system to evaluate the negative influences that axiom violations exert on the redistributive effect of taxes. In this paper, we reconsider the way Kakwani and Lambert measure violations of their second axiom, which concerns the re-ranking of tax rates. We construct a non-negative index which is strictly faithful to Kakwani and Lambert’s commands; we show that the Authors’ measure does not exactly fit the statements made in their second axiom. Both Kakwani and Lambert’s original measurement system and the modified one are then applied to Italian personal income tax in 2008. According to the modified measurement system, the average tax rate seems to play a smaller role than that suggested by the results gained using Kakwani and Lambert’s original methodology. Copyright Springer-Verlag 2013

Suggested Citation

  • Simone Pellegrino & Achille Vernizzi, 2013. "On measuring violations of the progressive principle in income tax systems," Empirical Economics, Springer, vol. 45(1), pages 239-245, August.
    • Handle: RePEc:spr:empeco:v:45:y:2013:i:1:p:239-245
    DOI: 10.1007/s00181-012-0613-1
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00181-012-0613-1
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00181-012-0613-1?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Achille VERNIZZI, 2009. "Playing with the Hadamard product in decomposing Gini, concentration, redistribution and re-ranking indexes," Departmental Working Papers 2009-50, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Andrea Brandolini, 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 183-239, September.
    3. Justin Van De Ven & John Creedy, 2005. "Taxation, Reranking and Equivalence Scales," Bulletin of Economic Research, Wiley Blackwell, vol. 57(1), pages 13-36, January.
    4. McCloskey, Donald N, 1985. "The Loss Function Has Been Mislaid: The Rhetoric of Significance Tests," American Economic Review, American Economic Association, vol. 75(2), pages 201-205, May.
    5. Simone Pellegrino & Achille Vernizzi, 2010. "The 2007 Personal Income Tax Reform in Italy: Effects on Potential Equity, Horizontal Inequity and Re-ranking," Working papers 14, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    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. Simone Pellegrino & Guido Perboli & Giovanni Squillero, 2019. "Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 37-64, April.
    2. Ivica Urban, 2016. "Impact of Taxes and Benefits on Inequality among Groups of Income Units," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(1), pages 120-144, March.
    3. Daniela Mantovani & Simone Pellegrino & Achille Vernizzi, 2020. "A note on the maximum value of the Kakwani index," Empirical Economics, Springer, vol. 58(2), pages 869-874, February.
    4. Simone Pellegrino & Achille Vernizzi, 2018. "Decomposing the Redistributive Effect of Taxation to Reveal Axiom Violations," Working papers 049, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    5. Simone Pellegrino, 2020. "The Gini Coefficient: Its Origins," Working papers 070, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
      • Simone Pellegrino, 2024. "The Gini Coefficient: Its Origins," Working papers 086, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    6. Maria Giovanna Monti & Simone Pellegrino & Achille Vernizzi, 2015. "On Measuring Inequity in Taxation Among Groups of Income Units," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(1), pages 43-58, March.
    7. Achille Vernizzi & Edyta Mazurek, 2013. "Some Considerations on Measuring the Progressive Principle Violations and the Potential Equity in Income Tax Systems," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 14(3), pages 467-486, September.

    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. Daniele Checchi & Laura Pagani, 2005. "The effects of unions on wage inequality. The Italian case in the 1990s," Politica economica, Società editrice il Mulino, issue 1, pages 43-70.
    2. Marc Poitras, 2004. "The Impact of Macroeconomic Announcements on Stock Prices: In Search of State Dependence," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 549-565, January.
    3. Emanuele Ciani & Donatella Fresu, 2011. "From SHIW to IT-SILC: construction and representativeness of the new CAPP_DYN first-year population," Center for the Analysis of Public Policies (CAPP) 0092, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    4. Bruce Headey, 2008. "Poverty Is Low Consumption and Low Wealth, Not Just Low Income," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(1), pages 23-39, October.
    5. Fabio Clementi & Mauro Gallegati & Giorgio Kaniadakis, 2010. "A model of personal income distribution with application to Italian data," Empirical Economics, Springer, vol. 39(2), pages 559-591, October.
    6. Erich Battistin & Raffaele Miniaci & Guglielmo Weber, 2003. "What Do We Learn from Recall Consumption Data?," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
    7. Peter Lambert & Thor Thoresen, 2009. "Base independence in the analysis of tax policy effects: with an application to Norway 1992–2004," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(2), pages 219-252, April.
    8. Parcell, Joe L. & Kastens, Terry L. & Dhuyvetter, Kevin C. & Schroeder, Ted C., 2000. "Agricultural Economists' Effectiveness in Reporting and Conveying Research Procedures and Results," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(2), pages 173-182, October.
    9. Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 262-296, May.
    10. Riccardo Massari, 2009. "Is income becoming more polarized Italy? A closer look with a distributional approach," Working Papers 1, Doctoral School of Economics, Sapienza University of Rome.
    11. Piero Cipollone & Andrea Brandolini, 2002. "Urban Poverty in Developed Countries," LIS Working papers 329, LIS Cross-National Data Center in Luxembourg.
    12. Sergio Destefanis & Giovanni Pica, 2010. "It’s wages, it’s hours, it’s the Italian wage curve," CSEF Working Papers 247, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    13. Luigi Guiso & Tullio Jappelli, 2000. "Household Portfolios in Italy," CSEF Working Papers 43, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    14. Stephen T. Ziliak & Deirdre N. McCloskey, 2013. "We Agree That Statistical Significance Proves Essentially Nothing: A Rejoinder to Thomas Mayer," Econ Journal Watch, Econ Journal Watch, vol. 10(1), pages 97-107, January.
    15. Paolo Liberati, 2000. "Did VAT change redistribute purchasing power in Italy?," Working Papers in Public Economics 40, Department of Economics and Law, Sapienza University of Roma.
    16. Emanuela Raffinetti & Elena Siletti & Achille Vernizzi, 2015. "On the Gini coefficient normalization when attributes with negative values are considered," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 24(3), pages 507-521, September.
    17. Gallardo, R. Karina & Olanie, Aaron & Ordóñez, Rita & Ostrom, Ostrom, 2015. "The Use of Electronic Payment Machines at Farmers Markets: Results from a Choice Experiment Study," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(01), pages 1-26, February.
    18. Harrington, David, 2018. "Constraining Rivals: The Effect of State-Mandated Facility Requirements on the Locations and Sizes of Funeral Homes," Working Papers 06958, George Mason University, Mercatus Center.
    19. John Creedy & Cath Sleeman, 2005. "Adult equivalence scales, inequality and poverty," New Zealand Economic Papers, Taylor & Francis Journals, vol. 39(1), pages 51-81.
    20. Creedy, John & Li, Shuyun May & Moslehi, Solmaz, 2010. "Inequality Aversion And The Optimal Composition Of Government Expenditure," Macroeconomic Dynamics, Cambridge University Press, vol. 14(S2), pages 290-306, November.

    More about this item

    Keywords

    Microsimulation models; Personal income tax; Progressive principle; Redistributive effect; Re-ranking; C81; H23; H24;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • 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:spr:empeco:v:45:y:2013:i:1:p:239-245. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.