A synthesis of local and effective tax progressivity measurement

Satya Chakravarty and Palash Sarkar

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines theoretical properties of local and global measures of income tax progressivity. In particular, consistency property of global measures with local measures is analyzed. Using a normative approach, an index of performance in effective progression underlying a tax system, in relation to that of a ‘norm’, is suggested and analyzed. The norm chosen here is the welfare level associated with the post-tax distribution resulting from an inequality minimizing taxation policy which maintains pre-tax rank orders of tax payers and does not impose any additional tax burden on them, given that the pre-tax distribution is fixed as well. As the actual post-tax welfare increases, effective progression (hence performance) improves, which ensures that it is possible to elevate the level of performance sequentially, as may be desired by a policy maker, towards achieving the norm welfare.

Keywords: taxation; effective progression; inequality minimization; welfare; performance; policy (search for similar items in EconPapers)
JEL-codes: H24 (search for similar items in EconPapers)
Date: 2022-10-19
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:115180

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