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The Distributional Superiority of Tax Credits

Sophia Delipalla () and Harry Papapanagos ()

Studies in Economics from School of Economics, University of Kent

Abstract: This paper examines the distributional performance of social security provisions in the form of allowances, income related deductions and tax credits. Our analysis reveals that provisions in the form of tax credits is more progressive and redistributive relative to allowances and income related deductions. We demonstrate the distributional superiority of tax credits in the Greek tax and social security system where the replacement of all allowances and income related deductions with tax credits, in a revenue neutral manner, results in a considerable increase in the progressivity and redistribution of the tax system.

Keywords: Tax Credits; Progressivity; Redistribution (search for similar items in EconPapers)
JEL-codes: H23 H24 H55 (search for similar items in EconPapers)
Date: 1996-03
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Forthcoming in Contributions to Economic Theory, 2000, ed R Blundell, North-Holland

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Persistent link: https://EconPapers.repec.org/RePEc:ukc:ukcedp:9608

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