Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

Pellegrino, Simone; Perboli, Guido; Squillero, Giovanni

doi:10.1007/s40888-018-0132-4

Cited by 6 publications

(3 citation statements)

References 28 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Here we focus on the module of the microsimulation model concerning the personal income tax that is an updated version of the model described in Pellegrino et al (2011). Technical details regarding the structure and main results of this version of the micro‐simulation model can be found in Pellegrino et al (2019). The model uses, as input, income data provided by the Bank of Italy (2015) Survey on Household Income and Wealth (hereafter SHIW).…”

Section: An Application To Real Tax Datamentioning

confidence: 99%

The Zenga Equality Curve: A New Approach to Measuring Tax Redistribution and Progressivity

Greselin

Pellegrino

Vernizzi

2020

Review of Income and Wealth

Self Cite

View full text Add to dashboard Cite

We adopt and extend the new Zenga inequality curve to study the degree of progressivity as well as the redistributive and re‐ranking effects of a personal income tax system. Moreover, we also establish the social welfare implications of these new inequality measures and compare them with the classical approach based on the Lorenz curve and the Gini coefficient. The Zenga methodology is based on comparing the mean income of the poorest income earners with the mean income of the remaining richest part of the population. To the best of our knowledge, this approach has never been applied to study the effects produced by a personal income tax. To fill this gap in the literature, we prove that the elasticity of the Zenga uniformity curve with respect to the Lorenz curve is always greater than 1, thus recasting—within the new paradigm—the most important curves and the corresponding tax indices, such as the Reynolds–Smolensky, the Kakwani, and the Atkinson–Plotnick–Kakwani indices. We then derive three important inequalities for the newly developed measures, inspired by the well‐known properties of the classical approach. Finally, we show how some information, which could remain unnoticed by the cumulative approach inherent to the Lorenz curve, is instead highlighted by the new methodology. The advantages of complementing the classic indices with the new ones are discussed through an application to the Italian tax system.

show abstract

Section: An Application To Real Tax Datamentioning

confidence: 99%

The Zenga Equality Curve: A New Approach to Measuring Tax Redistribution and Progressivity

Greselin

Pellegrino

Vernizzi

2020

Review of Income and Wealth

Self Cite

View full text Add to dashboard Cite

show abstract

“…We make use of a static microsimulation model concerning the Italian personal income tax [Pellegrino, 2007] updated to the 2014 fiscal year [Pellegrino et al, 2017]. 2 As input data, it employs those provided by the Bank of Italy [2015] in its Survey on Household Income and Wealth, 3 published in 2016 with regard to the 2014 fiscal year.…”

Section: An Application To a Real World Taxmentioning

confidence: 99%

A note on the maximum value of the Kakwani index

2018

Self Cite

View full text Add to dashboard Cite

The overall tax revenue of a real world personal income tax cannot be eventually paid only by the richest taxpayer. Therefore, the maximum concentration coefficient for taxes cannot be equal to 1, and, consequently, the maximum value of the Kakwani index cannot be 1 minus the Gini coefficient for pre-tax incomes, as generally described in the related literature. We give evidence of this phenomenon by illustrating a theoretical example, and by evaluating its maximum value when a real world tax is considered.

show abstract

“…Their results suggest that there is a margin for improving equity in the Italian tax system. These studies were carried out further towards the application of multiple objective genetic algorithms Pellegrino et al (2019). The authors noticed that the direction of tax reform may depend on conflicting criteria.…”

mentioning

confidence: 99%

Application of Genetic Algorithm to Optimal Income Taxation

Małecka-Ziembińska

Ziembiński

2020

JRFM

View full text Add to dashboard Cite

This paper, intended for researchers, introduces a stochastic method for calculating the optimal tax schedule based on taxpayer utility, population skill distribution, and wages. It implements and extends the classic approach to optimal income tax calculation introduced by J.A. Mirrlees. A genetic algorithm is applied instead of the numerical or analytical method of solving the problem. In the experimental part of the article, we took basic statistics for Germany in 2017 to infer about the distribution skills and wages of the working population. Their aim was to verify whether our approach would give similar results to those known from the literature on the subject. Thus, we have calculated the impact of the taxpayer attitude to work and budget external flows on the income tax schedule. Then, we measured the convergence of the search process across multiple runs of the algorithm. Analysis of obtained results brought us to the conclusion that they are similar to one known from the literature.

show abstract

Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

Cited by 6 publications

References 28 publications

The Zenga Equality Curve: A New Approach to Measuring Tax Redistribution and Progressivity

The Zenga Equality Curve: A New Approach to Measuring Tax Redistribution and Progressivity

A note on the maximum value of the Kakwani index

Application of Genetic Algorithm to Optimal Income Taxation

Contact Info

Product

Resources

About