EconPapers    
Economics at your fingertips  
 

Can a poverty-reducing and progressive tax and transfer system hurt the poor?

Sean Higgins and Nora Lustig ()

Journal of Development Economics, 2016, vol. 122, issue C, 63-75

Abstract: To analyze anti-poverty policies in tandem with the taxes used to pay for them, comparisons of poverty before and after taxes and transfers are often used. We show that these comparisons, as well as measures of horizontal equity and progressivity, can fail to capture an important aspect: that a substantial proportion of the poor are made poorer (or non-poor made poor) by the tax and transfer system. We illustrate with data from seventeen developing countries: in fifteen, the fiscal system is poverty-reducing and progressive, but in ten of these at least one-quarter of the poor pay more in taxes than they receive in transfers. We call this fiscal impoverishment, and axiomatically derive a measure of its extent. An analogous measure of fiscal gains of the poor is also derived, and we show that changes in the poverty gap can be decomposed into our axiomatic measures of fiscal impoverishment and gains.

Keywords: Poverty; Horizontal equity; Progressivity; Fiscal impoverishment (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304387816300220
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Can a poverty-reducing and progressive tax and transfer system hurt the poor? (2015) Downloads
Working Paper: Can Poverty-Reducing and Progressive Tax and Transfer System Hurt the Poor? (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:122:y:2016:i:c:p:63-75

Access Statistics for this article

Journal of Development Economics is currently edited by M. R. Rosenzweig

More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-07-27
Handle: RePEc:eee:deveco:v:122:y:2016:i:c:p:63-75