Measuring the Redistributive Capacity of Tax Policies

Charles Vellutini and Juan Carlos Benitez

No 2021/252, IMF Working Papers from International Monetary Fund

Abstract: This paper presents a novel technique to measure and compare the redistributive capacity of observed tax (or transfer) policies. The technique is based on income distribution simulations and controls for differences in pre-tax income distributions. It assumes that the only information on the pre-tax distribution available in each country-year is the Gini coefficient and the mean (GDP per capita). We illustrate the technique with an application to the personal income tax, using a dataset of 108 countries over the 2007-2018 period.

Keywords: Income distribution; redistribution; progressivity; personal income tax; novel technique; PIT redistribution; TRANSPLANT-AND-COMPARE method; PIT Progressive; market income Gini Coefficients; Income distribution; Income; Personal income tax; Progressive taxation; Income inequality; Global (search for similar items in EconPapers)
Pages: 28
Date: 2021-10-22
New Economics Papers: this item is included in nep-pbe and nep-pub
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