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Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers

Ali Enami (), Nora Lustig () and Rodrigo Aranda Balcazar ()

No 25, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.

New Economics Papers: this item is included in nep-lam, nep-ltv and nep-pbe
Date: 2016-11
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Published in Commitment to Equity, November 2016, pages 1-72

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http://repec.tulane.edu/RePEc/ceq/ceq25.pdf First version, 2016 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tul:ceqwps:25

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