Redistributive effect, progressivity and differential tax treatment: Personal income taxes in twelve OECD countries

Wagstaff, Adam; Doorslaer, Eddy van; Burg, Hattem Van Der; Calonge, Samuel; Christiansen, Terkel; Citoni, Guido; Gerdtham, Ulf G.; Gerfin, Michael; Gross, Lorna; Häkinnen, Unto; John, Jürgen; Johnson, Paul; Klavus, Jan; Lachaud, Claire; Lauridsen, Jørgen; Leu, Robert E.; Nolan, Brian; Perán, Encarna; Propper, Carol; Puffer, Frank W.; Rochaix, Lise; Rodrı́guez, Marisol; Stevens, Martin; Sundberg, Gun; Winkelhake, Olaf

doi:10.1016/s0047-2727(98)00085-1

Cited by 75 publications

(47 citation statements)

References 21 publications

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“…Low earners do not usually pay taxes thanks to tax allowances or tax-free brackets. The degree of vertical redistribution due to income tax schedules depends on a complex mix of tax level, tax progressivity and scope (tax base), as studied in Wagstaff et al (1999). International rankings on the levels of public spending (and in particular spending on redistribution) mirror tax levels, with lower taxation in Southern and Eastern Europe and the US at one end and high tax redistribution in Nordic countries at the other.…”

Section: E Redistributive and Incentive Effects Of Tax-benefit Systemsmentioning

confidence: 99%

Comparing inequality aversion across countries when labor supply responses differ

Bargain

Dolls

Neumann

et al. 2013

Int Tax Public Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu We analyze to which extent social inequality aversion differs across nations when controlling for actual country differences in labor supply responses. Towards this aim, we estimate labor supply elasticities at both extensive and intensive margins for 17 EU countries and the US. Using the same data, inequality aversion is measured as the degree of redistribution implicit in current tax-benefit systems, when these systems are deemed optimal. We find relatively small differences in labor supply elasticities across countries. However, this changes the cross-country ranking in inequality aversion compared to scenarios following the standard approach of using uniform elasticities. Differences in redistributive views are significant between three groups of nations. Labor supply responses are systematically larger at the extensive margin and often larger for the lowest earnings groups, exacerbating the implicit Rawlsian views for countries with traditional social assistance programs. Given the possibility that labor supply responsiveness was underestimated at the time these programs were implemented, we show that such wrong perceptions would lead to less pronounced and much more similar levels of inequality aversion. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: H11, H21, D63, C63

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Section: E Redistributive and Incentive Effects Of Tax-benefit Systemsmentioning

confidence: 99%

Comparing inequality aversion across countries when labor supply responses differ

Bargain

Dolls

Neumann

et al. 2013

Int Tax Public Finance

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“…Piketty and Saez (2007) present a historical perspective of progressivity in the US, France and the UK. In this paper we extend and update Wagstaff et al (1999a) by looking at the overall redistributive effect of income taxes which depends on the one hand on their departure from proportionality, i.e. the degree of progressivity, and on the other hand on the tax level.…”

Section: Introductionmentioning

confidence: 99%

The Redistributive Effect and Progressivity of Taxes Revisited: An International Comparison across the European Union

Verbist¹,

Figari²

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractOver the last few years concern for income inequality in European countries has increased remarkably. In this context, taxation is an important redistributive instrument and we investigate the redistributive role of direct taxes. We focus on the EU-15 countries and the evolution over the period 1998-2008, using EUROMOD, the EU-wide tax-benefit model. The research aim of this paper is twofold. First, we investigate empirically whether there is a link between pre-tax income inequality and redistribution through taxes. Second we hereby test whether there is a relationship between progressivity and the average tax level, the two building stones of the redistributive impact of taxes.JEL Classification: C81; D31; H23; H24

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“…Immervoll et al (2006a), Paulus et al (2009), Jara andTumino (2013) use tax and benefit data simulated with EUROMOD for EU countries, and Kim and Lambert (2009) analyse redistribution in the US on the basis of the CPS/ASEC. Wagstaff et al (1999) specifically analyse the progressivity of personal income taxes in the OECD countries using also the LIS data, while Verbist and Figari (2014) carry out similar analysis for EU countries relying on EUROMOD simulations, allowing them to extend the analysis with social insurance contributions as well. Piketty and Saez (2007) Microsimulation can help to detect inconsistencies and potential measurement errors in the existing data.…”

Section: Adding Informationmentioning

confidence: 99%

Microsimulation and Policy Analysis

Figari

Paulus

Sutherland

2015

Handbook of Income Distribution

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ISER Working Paper Series www.iser.essex.ac.uk Microsimulation and Policy AnalysisNon-technical summary This paper is prepared as a chapter forthcoming in the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland). Microsimulation methods are increasingly used to study the effects of policies on the income distribution contributing both to policy debates and academic literature. In general terms, microsimulation refers to modelling changes in the state or behaviour of micro-level units. We provide an overview of approaches that address questions related to the impact of taxbenefit policies on household income distribution. We first discuss how microsimulation modelling contributes to the analysis of the income distribution more broadly, pointing out that it can enrich survey and administrative data by checking its consistency, adding further details and enhancing analytical flexibility. In addition, it provides the basis for calculating indicators that cannot otherwise be estimated directly from micro-data such as measures of work incentives, net support for children and automatic stabilisers embedded in tax-benefit systems. We then focus more specifically on the role of microsimulation in policy evaluation. Taxbenefit models can provide information on household disposable income and its components under various policy scenarios and as such constitute a unique tool for ex ante policy analysis, though equally can be used for ex post analysis. We review the formal framework underlying such microsimulation-based decomposition analysis of income distribution and suggest a broader perspective to accommodate a wider range of applications. Our main emphasis is on static modelling methods, though we also consider extensions accounting for behavioural reactions and links with macroeconomic models. As microsimulation models are often concerned with current and future policies, we discuss various approaches to predict the income distribution given that data providing information on the current situation becomes available with a time lag, distinguishing between nowcasting and forecasting. We emphasise the role of comparative analysis as cross-country differences in tax-benefit systems and population structures provide a basis to assess the robustness of results and generalise conclusions. We provide empirical illustrations drawing mainly on analysis using the EU-wide tax-benefit model EUROMOD. Covering 27 countries and made generally accessible this is now one of the most widely used models. There are many remaining challenges to providing estimates of the effects of policy and policy changes that can be used with confidence within policy analysis and we consider three major issues: reconciling the simulated income distribution and that measured using the original micro-data; accounting for benefit non take-up and tax non-compliance, as well as validating and assessing the statistical reliability of microsimulation estimates. While our main focus is on the distributio...

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Redistributive effect, progressivity and differential tax treatment: Personal income taxes in twelve OECD countries

Cited by 75 publications

References 21 publications

Comparing inequality aversion across countries when labor supply responses differ

Comparing inequality aversion across countries when labor supply responses differ

The Redistributive Effect and Progressivity of Taxes Revisited: An International Comparison across the European Union

Microsimulation and Policy Analysis

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