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A synthesis of local and effective tax progressivity measurement

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  • Chakravarty, Satya R.
  • Sarkar, Palash

Abstract

This paper examines theoretical properties of local and global measures of income tax progressivity. In particular, consistency property of global measures with local measures is analyzed. Using a normative approach, an index of performance in effective progression underlying a tax system, in relation to that of a ‘norm’, is suggested and analyzed. The norm chosen here is the welfare level associated with the post-tax distribution resulting from an inequality minimizing taxation policy which maintains pre-tax rank orders of tax payers and does not impose any additional tax burden on them, given that the pre-tax distribution is fixed as well. As the actual post-tax welfare increases, effective progression (hence performance) improves, which ensures that it is possible to elevate the level of performance sequentially, as may be desired by a policy maker, towards achieving the norm welfare.

Suggested Citation

  • Chakravarty, Satya R. & Sarkar, Palash, 2022. "A synthesis of local and effective tax progressivity measurement," MPRA Paper 115180, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115180
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    References listed on IDEAS

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    More about this item

    Keywords

    taxation; effective progression; inequality minimization; welfare; performance; policy;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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