The inequality effects of a dual income tax system

Peter J. Lambert and Thor Thoresen

Discussion Papers from Statistics Norway, Research Department

Abstract: The overall inequality effects of a dual income tax (DIT) system, combining progressive taxation of labor income with proportional taxation of income from capital, are investigated. Simple examples show that correlations between distributions of wage and capital income, the degree of tax rate differentiation in the DIT, and reranking of tax-payers can be expected to complicate the analysis. We trace out what can be said definitively, obtaining sufficient conditions for unambiguous inequality reduction and identifying the nature of the implicit redistribution between labor and capital income which is involved, with the help of Norwegian income tax data.

Keywords: Personal income tax; dual income tax; redistributive effect (search for similar items in EconPapers)
JEL-codes: D31 D63 H31 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-acc, nep-ltv, nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Inequality Effects of a Dual Income Tax System (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:663

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