Is an inequality-neutral flat tax reform really neutral?
Juan Prieto Rodríguez (),
Juan Gabriel Rodríguez () and
Rafael Salas ()
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Juan Prieto Rodríguez: Universidad de Oviedo e Instituto de Estudios Fiscales, http://www19.uniovi.es/economia/prof/Fundamentos/JuanPrietoRodriguez/index.html
Juan Gabriel Rodríguez: Universidad Rey Juan Carlos de Madrid e Instituto de Estudios Fiscales, http://www.urjc.es/
Authors registered in the RePEc Author Service: Juan Gabriel Rodríguez () and
Juan Prieto-Rodriguez ()
No E2004/43, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces
Let us assume a revenue- and inequality-neutral flat tax reform shifting from a graduated-rate tax. Is this reform really distributional neutral? Traditionally, there has been a bias toward the inequality analysis, forgetting other relevant aspects of the income distribution. This kind of reforms implies a set of composite transfers, both progressive and regressive, even though inequality remains unchanged. This paper shows that polarization is a useful tool for characterizing this set of transfers caused by inequality-neutral tax reforms. A simulation exercise illustrates how polarization can be used to discriminate between two inequality-neutral tax alternatives.
Keywords: polarization; inequality; flat tax (search for similar items in EconPapers)
JEL-codes: D39 D63 H30 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-acc and nep-pbe
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Working Paper: IS AN INEQUALITY-NEUTRAL FLAT TAX REFORM REALLY NEUTRAL?
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