Personal Income Tax Progressivity: Trends and Implications

Claudia Gerber, Alexander Klemm, Li Liu and Victor Mylonas

No 2018/246, IMF Working Papers from International Monetary Fund

Abstract: This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pre-tax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. Regressions do not reveal a significant impact of progressivity on growth, suggesting that efficiency costs of progressivity may be small—at least for degrees of progressivity observed in the sample.

Keywords: WP; income; tax rate; avg. wage; Progressivity; Growth; Personal Income Tax; Tax Wedge; Inequality; income category; progressive tax system; OECD tax database data; income taxation; avg. waget-5; labor income; Progressive taxation; Personal income; Social security contributions; Income distribution; Global (search for similar items in EconPapers)
Pages: 24
Date: 2018-11-20
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Citations: View citations in EconPapers (8)

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