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Tax Progressivity and Social Welfare with a Continuum of Inequality Views

Marko Ledić ; Faculty of Economics and Business Zagreb
Ivica Rubil   ORCID icon orcid.org/0000-0002-9111-7313 ; The Institute of Economics, Zagreb
Ivica Urban   ORCID icon orcid.org/0000-0001-6734-2791 ; Institute of Public Finance

Puni tekst: engleski, pdf (1 MB) str. 5-40 preuzimanja: 35* citiraj
APA 6th Edition
Ledić, M., Rubil, I. i Urban, I. (2021). Tax Progressivity and Social Welfare with a Continuum of Inequality Views. Radni materijali EIZ-a, (3), 5-40. Preuzeto s https://hrcak.srce.hr/261017
MLA 8th Edition
Ledić, Marko, et al. "Tax Progressivity and Social Welfare with a Continuum of Inequality Views." Radni materijali EIZ-a, vol. , br. 3, 2021, str. 5-40. https://hrcak.srce.hr/261017. Citirano 22.10.2021.
Chicago 17th Edition
Ledić, Marko, Ivica Rubil i Ivica Urban. "Tax Progressivity and Social Welfare with a Continuum of Inequality Views." Radni materijali EIZ-a , br. 3 (2021): 5-40. https://hrcak.srce.hr/261017
Harvard
Ledić, M., Rubil, I., i Urban, I. (2021). 'Tax Progressivity and Social Welfare with a Continuum of Inequality Views', Radni materijali EIZ-a, (3), str. 5-40. Preuzeto s: https://hrcak.srce.hr/261017 (Datum pristupa: 22.10.2021.)
Vancouver
Ledić M, Rubil I, Urban I. Tax Progressivity and Social Welfare with a Continuum of Inequality Views. Radni materijali EIZ-a [Internet]. 2021 [pristupljeno 22.10.2021.];(3):5-40. Dostupno na: https://hrcak.srce.hr/261017
IEEE
M. Ledić, I. Rubil i I. Urban, "Tax Progressivity and Social Welfare with a Continuum of Inequality Views", Radni materijali EIZ-a, vol., br. 3, str. 5-40, 2021. [Online]. Dostupno na: https://hrcak.srce.hr/261017. [Citirano: 22.10.2021.]

Sažetak
If public policies should aim at promoting social welfare, then tax progressivity/regressivity should be considered in terms of its impact on social welfare, rather than as an end in itself. Whether a tax is progressive or regressive and how much it affects social welfare depends on how a neutral tax, a tax neither progressive nor regressive, is defined. This, in turn, depends on the inequality view taken, that is, on what kind of transformation of an income distribution is considered not to change the level of inequality. Kakwani and Son (Journal of Economic Inequality, 2021) developed a social welfare-based framework, which enables one to decompose the total welfare loss associated with a tax into elements of which one is the welfare impact of tax progressivity/regressivity. While Kakwani and Son consider only the inequality views known as relative and absolute inequality, we provide a generalisation of the framework to accommodate all intermediate inequality views in the continuum between the two polar views. While the total welfare loss does not depend on inequality view, its composition does: for a progressive (regressive) tax, moving closer to the relative view reduces (increases) the importance of progressivity (regressivity) for the total welfare impact. Thus, the perception of the composition of a given tax-induced welfare loss varies with the inequality view taken. We apply the generalised framework to assess the impact on social welfare of the Croatian tax system, showing that it matters for such an assessment which inequality view is taken.

Ključne riječi
progressivity; regressivity; neutrality; relative inequality; absolute inequality; intermediate inequality

Hrčak ID: 261017

URI
https://hrcak.srce.hr/261017

Posjeta: 93 *