Identifying Tax Implicit Equivalence Scales

Justin van de Ven

No 444, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: This paper describes a simple and tractable method for identifying equivalence scales that reflect the value judgements implicit in a tax-benefit system. The approach depends on two identifying assumptions and a functional description for transfer payments that can be estimated using common micro-data. We use this approach to evaluate tax implicit equivalence scales for the UK tax-transfer system that applied in April 2009. The estimated tax implicit scales vary positively with tax unit size and generally decrease with gross earnings, consistent with recent estimates calculated on consumption data. We conclude by discussing potential applications for the proposed tax implicit scales.

Keywords: equivalence scale; taxation; horizontal equity (search for similar items in EconPapers)
JEL-codes: D31 H23 I38 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-pbe
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Related works:
Working Paper: Identifying Tax Implicit Equivalence Scales (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:444

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