Skip to main content

Redistributional Effects of Progressive Income Taxes

  • Chapter
Handbook of Income Inequality Measurement

Part of the book series: Recent Economic Thought Series ((RETH,volume 71))

Abstract

The progressive principle in income taxation states that the average tax rate should increase with income. Progression has an impact in many areas of economics. The problems, costs and beneficial consequences of this principle have been looked at from many angles and are, perhaps, well-known. (1953) Uneasy Case is an early example;2 more recent investigations include those of (1989) and (1994).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 259.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 329.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 329.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Similar content being viewed by others

References

  • Aggarwal, P.K. 1994. “A Local Distributional Measure of Tax Progressivity.” Public Finance/Finances Publiques 49: 1–11.

    Google Scholar 

  • Aronson, J.R. and P.J. Lambert. 1994. “Decomposing the Gini Coefficient to Reveal Vertical, Horizontal and Reranking Effects of Income Taxation.” National Tax Journal 47: 273–294.

    Google Scholar 

  • Aronson, J.R., P. Johnson and P.J. Lambert. 1994. “Redistributive Effect and Unequal Income Tax Treatment.” Economic Journal 104: 262–270.

    Article  Google Scholar 

  • Arnold, B.C. 1990. “The Lorenz Order and the Effects of Taxation Policies.” Bulletin of Economic Research 42: 249–264.

    Article  Google Scholar 

  • Atkinson, A.B. 1970. “On the Measurement of Inequality.” Journal of Economic Theory 2: 244–263.

    Article  Google Scholar 

  • Atkinson, A.B. and F. Bourguignon. 1987. “Income Distribution and Differences in Needs.” In G.R. Feiwel, ed., Arrow and the Foundations of the Theory of Economic Policy. London: Macmillan.

    Google Scholar 

  • Bamberg, G. and W.F. Richter. 1988. “Risk-taking Under Progressive Taxation: Three Partial Effects.” In W. Eichhorn, ed., Measurement in Economics: Theory and Applications of Economic Indices. Heidelberg: Physica-Verlag.

    Google Scholar 

  • Baum, S. 1987. “On the Measurement of Tax Progressivity: Relative Share Adjustment.” Public Finance Quarterly 15: 166–187.

    Article  Google Scholar 

  • Berliant, M. and M. Gouveia. 1993. “Equal Sacrifice and Incentive Compatible Income Taxation.” Journal of Public Economics 51: 219–240.

    Article  Google Scholar 

  • Besley, T.J. and I.P. Preston. 1988. “Invariance and the Axiomatics of Income Tax Progression: A Comment.” Bulletin of Economic Research 40: 159–163.

    Article  Google Scholar 

  • Binh, T.N. 1991. “A General Class of Aggregate Progressivity Measures Revisited.” Public Finance/Finances Publiques 46: 157–160.

    Google Scholar 

  • Blackorby, C. and D. Donaldson. 1984. “Ethical Social Index Numbers and the Measurement of Effective Tax/Benefit Progressivity.” Canadian Journal of Economics 17: 683–694.

    Article  Google Scholar 

  • Blum, W.J. and H. Kalven. 1953. The Uneasy Case for Progressive Taxation. Chicago: University Press.

    Google Scholar 

  • Blum, W.J. 1979. “The Uneasy Case for Progressive Taxation in 1976.” In C.D. Campbell, ed., Income Redistribution. Washington, DC: American Enterprise Institute for Public Policy Research.

    Google Scholar 

  • Bös, D. and B. Felderer. 1989. The Political Economy of Progressive Taxation. Berlin: Springer-Verlag.

    Book  Google Scholar 

  • Bös, D. and G. Tillmann. 1985. “An ‘Envy Tax’: Theoretical Principles and Applications to the German Surcharge on the Rich.” Public Finance/Finances Publiques 40: 35–63.

    Google Scholar 

  • Bourguignon, F. and C. Morrison. 1980. “Progressivité et incidence de la redistribution des revenus en pays développés.” Revue Économique XX: 197–233.

    Google Scholar 

  • Buchholz, W., W.F. Richter and J. Schwaiger. 1988. “Distributional Implications of Equal Sacrifice Rules.” Social Choice and Welfare 5: 223–226. Reprinted in W. Gaertner and P.K. Pattanaik, eds., Distributive Justice and Inequality. Heidelberg: Springer.

    Article  Google Scholar 

  • Burtless, G. and J.A. Hausman. 1978. “The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiment.” Journal of Political Economy 86: 1103–1130.

    Article  Google Scholar 

  • Cassidy, H.J. 1970. “Is a Progressive Tax Stabilizing?” National Tax Journal 23: 194–204.

    Google Scholar 

  • Dardanoni, V. and P.J. Lambert. 1987. “Welfare Rankings of Income Distributions: A Rôle for the Variance and Some Insights for Tax Reform.” Social Choice and Welfare 5: 1–17.

    Article  Google Scholar 

  • Decoster, A., E. Schokkaert and G. Van Camp. 1996. “Horizontal Neutrality and Vertical Redistribution with Indirect Taxes.” Research on Economic Inequality 7: 219–239.

    Google Scholar 

  • Duclos, J.-Y. 1993. “Progressivity, Redistribution and Equity, With Application to the British Tax and Benefit System.” Public Finance/Finances Publiques 48: 350–365.

    Google Scholar 

  • Duclos, J.-Y. 1995a. “Assessing the Performance of an Income Tax.” Bulletin of Economic Research 47: 115–127.

    Article  Google Scholar 

  • Duclos, J.-Y. 1995b. “Measuring Progressivity and Inequality.” Research on Economic Inequality 7: 19–37.

    Google Scholar 

  • Ebert, U. 1992. “Global Tax Progressivity.” Public Finance Quarterly 20: 77–92.

    Article  Google Scholar 

  • Albert, U. 1995. “Income Inequality and Differences in Household Size.” Mathematical Social Sciences 30: 37–55.

    Article  Google Scholar 

  • Ebert, U. 1997. “Social Welfare When Needs Differ: An Axiomatic Approach.” Economica 254: 233–244.

    Article  Google Scholar 

  • Eichhorn, W., H. Funke and W.F. Richter. 1984. “Tax Progression and Inequality of Income Distribution.” Journal of Mathematical Economics 13: 127–131.

    Article  Google Scholar 

  • Fellman, J. 1976. “The Effect of Transformations on Lorenz Curves.” Econometrica 44: 823–824.

    Article  Google Scholar 

  • Formby, J.P., T.G. Seaks and W.J. Smith. 1981. “A Comparison of Two New Measures of Tax Progressivity.” Economic Journal 91:1015–1019.

    Article  Google Scholar 

  • Formby, J.P., S.G. Medema and W.J. Smith. 1995. “Tax Neutrality and Social Welfare in a CGE Framework.” Public Finance Quarterly 23: 419–447.

    Article  Google Scholar 

  • Formby, J.P., W.J. Smith and P.D. Thistle. 1992. “On the Definition of Tax Neutrality: Distributional and Welfare Implications of Policy Alternatives.” Public Finance Quarterly 20: 3–23.

    Article  Google Scholar 

  • Gouveia, M. and R.P. Strauss. 1994. “Effective Federal Individual Income Tax Functions: An Exploratory Empirical Analysis.” National Tax Journal 47: 317–338.

    Google Scholar 

  • Hainsworth, G.B. 1964. “The Lorenz Curve as a General Tool of Economic Analysis.” Economic Record 40: 426–441.

    Article  Google Scholar 

  • Hayes, K., P.J. Lambert and D.J. Slottje. 1995. “Evaluating Effective Income Tax Progression.” Journal of Public Economics 56: 461–474.

    Article  Google Scholar 

  • Hemming, R. 1980. “Income Tax Progressivity and Labor Supply.” Journal of Public Economics 14: 95–100.

    Article  Google Scholar 

  • Hemming R. and M.J. Keen. 1983. “Single Crossing Conditions in Comparisons of Tax Progressivity.” Journal of Public Economics 20: 373–380.

    Article  Google Scholar 

  • Hutton J.P. and P.J. Lambert. 1983. “Inequality and Revenue Elasticity in Tax Reform.” Scottish Journal of Political Economy 30: 221–234.

    Article  Google Scholar 

  • Jenkins, S. 1988. “Reranking and the Analysis of Income Redistribution.” Scottish Journal of Political Economy 35; 65–76.

    Article  Google Scholar 

  • Jakobsson, U. 1976. “On the Measurement of the Degree of Progression.” Journal of Public Economics 5: 161–168.

    Article  Google Scholar 

  • Kakwani, N.C. 1977a. “Applications of Lorenz Curves in Economic Analysis.” Econometrica 45:719–727.

    Article  Google Scholar 

  • Kakwani, N.C. 1977b. “Measurement of Tax Progressivity: An International Comparison.” Economic Journal 87: 71–80.

    Article  Google Scholar 

  • Kakwani, N.C. 1980. Income, Inequality and Poverty: Methods of Estimation and Policy Applications. Oxford: Oxford University Press.

    Google Scholar 

  • Kakwani, N.C. 1984. “On the Measurement of Tax Progressivity and Redistributive Effect of Taxes with Applications to Horizontal and Vertical Equity.” Advances in Econometrics 3: 149–168.

    Google Scholar 

  • Kakwani, N.C. 1986. Analyzing Redistribution Policies: A Study Using Australian Data. Cambridge: Cambridge University Press.

    Google Scholar 

  • Kiefer, D.W. 1985. “Distributional Tax Progressivity Measurement.” National Tax Journal 37: 497–513.

    Google Scholar 

  • Lambert, P.J. 1985. “The Redistributive Effect of Taxes and Benefits.” Scottish Journal of Political Economy 32: 39–54.

    Article  Google Scholar 

  • Lambert, P.J. 1993a. The Distribution and Redistribution of Income: A Mathematical Analysis (second edition). Manchester University Press.

    Google Scholar 

  • Lambert, P.J. 1993b. “Inequality Reduction Through the Income Tax.” Economica 60: 357–365.

    Article  Google Scholar 

  • Lambert, P.J. 1994. “Redistribution Through the Income Tax.” In J. Creedy, ed., Taxation, Poverty and Income Distribution. Aldershot: Edward Elgar, pp. 1–16. Reprinted in W. Eichhorn, ed., Models and Measurement of Welfare and Inequality. Berlin: Springer Verlag, 1994, pp. 299-315.

    Google Scholar 

  • Lambert, P.J. and W. Pfähler. 1988. “On Aggregate Measures of the Net Redistributive Impact of Taxation and Government Expenditure.” Public Finance Quarterly 16: 178–202.

    Google Scholar 

  • Lambert, P.J. and W. Pfähler. 1992. “Income Tax Progression and Redistributive Effect: The Influence of Changes in Pre-Tax Income Distribution.” Public Finance/Finances Publiques 47: 1–16.

    Google Scholar 

  • Latham, R. 1988. “Lorenz-dominating Income Tax Functions.” International Economic Review 29: 185–198.

    Article  Google Scholar 

  • Lecaillon, J., F. Paukert, C. Morrison and D. Germidis. 1984. Income Distribution and Economic Development: an Analytical Survey. Geneva: ILO.

    Google Scholar 

  • Loomis, J.B. and C.F. Revier. 1988. “Measuring Regressivity of Excise Taxes: A Buyers Index.” Public Finance Quarterly 16: 301–314.

    Google Scholar 

  • Marhuenda, F. and I. Ortuño-Ortín. 1995. “Popular Support for Progressive Taxation.” Economics Letters 48: 319–324.

    Article  Google Scholar 

  • Mehran, F. 1976. “Linear Measures of Income Inequality.” Econometrica 44: 805–809.

    Article  Google Scholar 

  • Milanovic, B. 1994. “Comment on ‘Income Tax Progression and Redistributive Effect: The Influence of Changes in the Pre-tax Income Distribution’.” Public Finance/Finances Publiques 49: 126–133.

    Google Scholar 

  • Mitra, T. and E.A. Ok. 1996. “Personal Income Taxation and the Principle of Equal Sacrifice Revisited.” International Economic Review 37: 925–948.

    Article  Google Scholar 

  • Mitra, T. and E.A. Ok 1997. “On the Equitability of Progressive Taxation.”. Journal of Economic Theory, 73: 316–334.

    Article  Google Scholar 

  • Moyes, P. 1988. “A Note on Minimally Progressive Taxation and Absolute Income Inequality.” Social Choice and Welfare 5: 227–234.

    Article  Google Scholar 

  • Moyes, P. 1989. “Equiproportionate Growth of Incomes and After-tax Inequality.” Bulletin of Economic Research 41: 287–294.

    Article  Google Scholar 

  • Moyes, P. and A.F. Shorrocks. 1994. “The Impossibility of a Progressive Tax Structure.” Mimeo. University of Essex.

    Google Scholar 

  • Muliere, P. and M. Scarsini. 1989. “A Note on Stochastic Dominance and Inequality Measures.” Journal of Economic Theory 49: 314–323.

    Article  Google Scholar 

  • Musgrave, R.A. and T. Thin. 1948. “Income Tax Progression, 1929-1948.” Journal of Political Economy 56: 498–514.

    Article  Google Scholar 

  • Norregaard, J. 1990. “Progressivity of Income Tax Systems.” OECD Economic Studies 15: 83–110.

    Google Scholar 

  • Ok, E.A. 1995. “On the Principle of Equal Sacrifice in Income Taxation.” Journal of Public Economics 58: 453–467.

    Article  Google Scholar 

  • Ok, E.A. 1997. “A Note on the Existence of Progressive Tax Structures, Social Choice and Welfare, 14: 527–543.

    Article  Google Scholar 

  • Pechman, J.A. and B. Okner. 1974. Who Bears the Tax Burden? Washington DC: Brookings Institution.

    Google Scholar 

  • Pfähler, W. 1983. “Measuring Redistributional Effects of Tax Progressivity by Lorenz Curves.” Jahrbücher für Nationalökonomie und Statistik 198: 237–249.

    Google Scholar 

  • Pfähler, W. 1984. “‘Linear’ Income Tax Cuts: Distributional Effects, Social Preferences and Revenue Elasticities.” Journal of Public Economics 24: 381–388.

    Article  Google Scholar 

  • Pfähler, W. 1987. “Redistributive Effects of Tax Progressivity: Evaluating a General Class of Aggregate Measures.” Public Finance/Finances Publiques 37: 1–31.

    Google Scholar 

  • Pfähler, W. 1990. “Redistributive Effect of Income Taxation: Decomposing Tax Base and Tax Rates Effects.” Bulletin of Economic Research 42: 121–129.

    Article  Google Scholar 

  • Pfahler, W. 1991. “A General Class of Aggregate Progressivity Measures Revisited: Reply.” Public Finance/Finances Publiques 46: 161–162 (corrigendum on p. 338).

    Google Scholar 

  • Pfingsten, A. 1987. “Axiomatically-based Local Measures of Tax Progression.” Bulletin of Economic Research 39:211–223.

    Article  Google Scholar 

  • Pfingsten, A. 1988. The Measurement of Tax Progression. Studies in Contemporary Economics, vol. 20. Berlin-Heidelberg: Springer-Verlag.

    Google Scholar 

  • Preston, I.P. 1987. “The Redistributive Effect of Progressive Taxation with Endogenous Labor Decisions.” Oxford University: M. Phil. Thesis.

    Google Scholar 

  • Reynolds, M. and E. Smolensky. 1977. Public Expenditures, Taxes, and the Distribution of Income: The United States, 1950, 1961, 1970. New York: Academic Press.

    Google Scholar 

  • Richter, W.F. 1984. “Saving, Taxation and Income Inequality.” In D. Bös, M. Rose and C. Seidl, eds. Beiträge zur Neueren Steuertheorie. Studies in Contemporary Economics, vol. 7. Berlin: Springer-Verlag, pp. 139–161.

    Chapter  Google Scholar 

  • Richter, W.F. and J.F. Hampe. 1984. “Measuring the Gain From Splitting Under Income Taxation.” Methods of Operations Research 51: 384–400.

    Google Scholar 

  • Rosen, H.S. 1976. “A Methodology for Evaluating Tax Reform Proposals.” Journal of Public Economics 6: 105–121.

    Article  Google Scholar 

  • Samuelson, P.A. 1947. Foundations of Economic Analysis. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Sandmo, A. 1983. “Progressive Taxation, Redistribution and Labor Supply.” Scandinavian Journal of Economics 85: 311–323.

    Article  Google Scholar 

  • Seidl, C. 1994. “Measurement of Tax Progressivity with Non-constant Income Distributions.” In W. Eichhorn, ed., Models and Measurement of Welfare and Inequality. Berlin: Springer Verlag, pp. 337–360.

    Chapter  Google Scholar 

  • Sen, A. 1973. On Economic Inequality. Oxford: Clarendon Press.

    Book  Google Scholar 

  • Slemrod, J. 1994. Tax Progressivity and Income Inequality. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Snow, A. and R.S. Warren. 1983. “Tax Progression in Lindahl Equilibrium.” Economics Letters 12: 319–326.

    Article  Google Scholar 

  • Suits, D. 1977. “Measurement of Tax Progressivity.” American Economic Review 67: 747–752.

    Google Scholar 

  • Snyder, J.M. and G.H. Kramer. 1988. “Fairness, Self-interest, and the Politics of the Progressive Income Tax.” Journal of Public Economics 36:197–230.

    Article  Google Scholar 

  • Thistle, P.D. 1989. “Uniform Progressivity, Residual Progression and Single-crossing.” Journal of Public Economics 37: 121–126.

    Article  Google Scholar 

  • Thon, D. 1987. “Redistributive Properties of Progressive Taxation.” Mathematical Social Sciences 14:185–191.

    Article  Google Scholar 

  • Young, H.P. 1990. “Progressive Taxation and Equal Sacrifice.” American Economic Review 80: 253–266.

    Google Scholar 

  • Yitzhaki, S. 1983. “On an Extension of the Gini Index.” International Economic Review 24: 617–628.

    Article  Google Scholar 

  • Zabalza, A. and J.L. Arrufat. 1988. “Efficiency and Equity Effects of Reforming the British System of Direct Taxation: A Utility-based Simulation.” Economica 55: 21–45.

    Article  Google Scholar 

  • Bamberg, G. and W.F. Richter. 1988. “Risk-taking Under Progressive Taxation: Three Partial Effects.” In W. Eichhorn, ed., Measurement in Economics: Theory and Applications of Economic Indices. Heidelberg: Physica-Verlag.

    Google Scholar 

  • Musgrave, R.A. and T. Thin. 1948. “Income Tax Progression, 1929-1948.” Journal of Political Economy 56: 498–514.

    Article  Google Scholar 

Download references

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 1999 Springer Science+Business Media New York

About this chapter

Cite this chapter

Lambert, P.J. (1999). Redistributional Effects of Progressive Income Taxes. In: Silber, J. (eds) Handbook of Income Inequality Measurement. Recent Economic Thought Series, vol 71. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-4413-1_17

Download citation

  • DOI: https://doi.org/10.1007/978-94-011-4413-1_17

  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-94-010-5897-1

  • Online ISBN: 978-94-011-4413-1

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics