On the Equivalence between Progressive Taxation and Inequality Reduction

Posted: 2 Jun 2008

See all articles by Biung-Ghi Ju

Biung-Ghi Ju

University of Kansas - Department of Economics

Juan D. Moreno Ternero

Universidad Pablo de Olavide

Abstract

We establish the precise connections between progressive taxation and inequality reduction, in a setting where the level of tax revenue to be raised is exogenously fixed and tax schemes are balanced. We show that, in contrast with the traditional literature on taxation, the equivalence between inequality reduction and the combination of progressivity and income order preservation does not always hold in this setting. However, we show that, among rules satisfying consistency and, either revenue continuity, or revenue monotonicity, the equivalence remains intact.

Keywords: progressivity, inequality reduction, income order preservation, consistency, revenue monotonicity, taxation

JEL Classification: C70, D63, D70, H20

Suggested Citation

Ju, Biung-Ghi and Moreno-Ternero, Juan D., On the Equivalence between Progressive Taxation and Inequality Reduction. Social Choice and Welfare, Vol. 30, No. 4, pp. 561-569, 2008, Available at SSRN: https://ssrn.com/abstract=1138596

Biung-Ghi Ju

University of Kansas - Department of Economics ( email )

1300 Sunnyside Drive
Lawrence, KS 66045-7585
United States

Juan D. Moreno-Ternero (Contact Author)

Universidad Pablo de Olavide ( email )

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain

HOME PAGE: http://https://sites.google.com/site/jmorenoternero/

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