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On the equivalence between progressive taxation and inequality reduction

Biung-Ghi Ju () and Juan Moreno-Ternero ()

No 718, Discussion Paper Series from Institute of Economic Research, Korea University

Abstract: We establish the precise connections between progressive taxation and inequality reduction, in a setting where the level of tax revenue to be raised is exogenously fixed and tax schemes are balanced. We show that, in contrast with the traditional literature on taxation, the equivalence between inequality reduction and the combination of progressivity and income order preservation does not always hold in this setting. However, we show that, among rules satisfying consistency and, either revenue continuity, or revenue monotonicity, the equivalence remains intact.

Keywords: progressivity; inequality reduction; income order preservation; consistency; taxation (search for similar items in EconPapers)
JEL-codes: C70 D63 D70 H20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2007
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http://econ.korea.ac.kr/~ri/WorkingPapers/w0718.pdf (application/pdf)

Related works:
Working Paper: On the equivalence between progressive taxation and inequality reduction (2009) Downloads
Journal Article: On the equivalence between progressive taxation and inequality reduction (2008) Downloads
Working Paper: On the equivalence between progressive taxation and inequality reduction (2007) Downloads
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