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A Note on Progressive Taxation and Inequality Equivalence

In: Inequality, Taxation and Intergenerational Transmission

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  • Claudio Zoli

Abstract

We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We consider a two-parameter formalization of the concept of inequality equivalence that both includes, as special cases, the intermediate inequality equivalence and the path-independent/unit-consistent inequality equivalence. Both criteria could range from relative to absolute inequality views as the parameters in the formulation change. For the path-independent/unit-consistent inequality equivalence the condition of nondecreasing average tax rate is necessary and sufficient to guarantee the inequality-reducing effect of taxation for all the inequality views in between the relative and the absolute.

Suggested Citation

  • Claudio Zoli, 2018. "A Note on Progressive Taxation and Inequality Equivalence," Research on Economic Inequality, in: Inequality, Taxation and Intergenerational Transmission, volume 26, pages 15-33, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-258520180000026003
    DOI: 10.1108/S1049-258520180000026003
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    More about this item

    Keywords

    Progressive taxation; inequality equivalence; intermediate measures; unit consistency; path-independent inequality; Lorenz dominance; D31; D63; H23;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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