Should the Rich Be Taxed More? The Fiscal Inequality Coefficient

John Hatgioannides (), Marika Karanassou () and Hector Sala
Additional contact information
John Hatgioannides: City St George's, University of London
Marika Karanassou: Queen Mary, University of London

No 10978, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper holistically addresses the effective (relative) income tax contribution of a given in-come (or, wealth) group. The widely acclaimed standard in public policy is the absolute benefaction of a given income group in filling up the fiscal coffers. Instead, we focus on the ratio of the average income tax rate of an income group divided by the percentage of national income (or wealth) appropriated by the same income group. In turn, we develop the Fiscal Inequality Coefficient which compares the effective percentage income tax payments of pairs of income (or wealth) groups. Using data for the US, we concentrate on pairs such as the Bottom 90% versus Top 10%, Bottom 99% versus Top 1%, and Bottom 99.9% versus Top 0.1%. We conclude that policy makers with a strong social conscience should re-evaluate the progressivity of the income tax system and make the richest echelons of the income and wealth distributions pay a fairer and higher tax.

Keywords: effective income tax rate; inequality; progressive income taxation; fiscal policy; fiscal inequality coefficient (search for similar items in EconPapers)
JEL-codes: E64 H23 H30 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2017-08
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
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Published - published in: Journal of Economic Issues, 2019, 53 (3), 881-889.

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Related works:
Journal Article: Should the Rich be Taxed More? The Fiscal Inequality Coefficient (2019)
Working Paper: Should the Rich be Taxed More? The Fiscal Inequality Coefficient (2017)
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