Flat rate taxes and inequality measurement

Tax flattening exercises which include an increase in personal allowances have been pervasive over the past two decades. Such changes, which typically benefit both the poor and the rich, at the expense of the middle class, have complex redistributive effects which are not obviously ‘equalizing’ or ‘...

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Bibliographic Details
Published in:Journal of public economics 2002-04, Vol.84 (1), p.33-46
Main Authors: Davies, James B., Hoy, Michael
Format: Article
Language:English
Subjects:
Economics
Income redistribution
Income tax
Inequality
Measurement
Public economics
Redistributive taxation
Tax rates
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Summary:Tax flattening exercises which include an increase in personal allowances have been pervasive over the past two decades. Such changes, which typically benefit both the poor and the rich, at the expense of the middle class, have complex redistributive effects which are not obviously ‘equalizing’ or ‘disequalizing’. We develop a systematic approach to comparing the relative inequality of flat rate tax schemes to conventional graduated rate taxes. We provide an illustrative example using 1993 U.S. taxfiler data.
ISSN:0047-2727
1879-2316
DOI:10.1016/S0047-2727(01)00110-4