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The Role of the Unit of Analysis in Tax Policy Reform Evaluations

Author

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  • John Creedy

    (The Treasury, Wellington, New Zealand)

  • Rosanna Scutella

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper examines the implications, for overall social welfare and inequality comparisons, of using different definitions of the unit of analysis - the income recipient - in computing summary measures. Comparisons are made using the Melbourne Institute Tax and Transfer Simulator (MITTS), a simulation model of the Australian direct tax and benefit system, of the effects of flattening the marginal tax rate structure. The reform was found to reduce inequality in all cases. However, it was not always judged to improve social welfare, depending on the degree of inequality aversion and the type of income unit chosen.

Suggested Citation

  • John Creedy & Rosanna Scutella, 2003. "The Role of the Unit of Analysis in Tax Policy Reform Evaluations," Melbourne Institute Working Paper Series wp2003n28, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2003n28
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2003n28.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. John Creedy & Catherine Sleeman, 2004. "Adult Equivalence Scales, Inequality and Poverty in New Zealand," Treasury Working Paper Series 04/21, New Zealand Treasury.
    2. John Creedy & Cath Sleeman, 2005. "Adult equivalence scales, inequality and poverty," New Zealand Economic Papers, Taylor & Francis Journals, vol. 39(1), pages 51-81.
    3. John Creedy & Guyonne Kalb, 2005. "Behavioural Microsimulation Modelling With the Melbourne Institute Tax and Transfer Simulator(MITTS) : Uses and Extensions," Department of Economics - Working Papers Series 932, The University of Melbourne.
    4. John Creedy & Guyonne Kalb, 2005. "Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(1), pages 73-110, March.
    5. Christopher Ball & John Creedy, 2015. "Inequality in New Zealand 1983/84 to 2013/14," Treasury Working Paper Series 15/06, New Zealand Treasury.
    6. Burlacu, Irina & O'Donoghue, Cathal, 2012. "Differential welfare state impacts for frontier working age families," MERIT Working Papers 2012-061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    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.

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