A note on minimally progressive taxation and absolute income inequality
The Lorenz curve of income after tax is known to dominate the one before tax for all given pre-tax income distributions, if, and only if, average tax liability is increasing with income (Jakobsson 1976; Eichhorn et al. 1984). It is shown in this note that the absolute inequality of incomes (Kolm 1976) is unambiguously reduced by taxation if, and only if, tax liability is increasing with income.
Unable to display preview. Download preview PDF.
- Blum WJ, Kalven HK (1953) The uneasy case for progressive taxation. University of Chicago Press, ChicagoGoogle Scholar
- Eichhorn W, Funke H, Richter WF (1984) Tax progression and inequality of income distribution. J Math Econ 13: 127–131Google Scholar
- Fei JCH (1981) Equity oriented fiscal programs. Econometrica 49: 869–881Google Scholar
- Fields GS, Fei JCH (1978) On inequality comparisons. Econometrica 46: 303–316Google Scholar
- Foster JE (1985) Inequality measurement. In: Young HP (ed) Fair allocations, vol 33, American Mathematical Society Proceedings of Symposia in Applied Mathematics. Providence, Rhode IslandGoogle Scholar
- Jakobsson U (1976) On the measurement of the degree of progression. J Publ Econ 5: 161–168Google Scholar
- Kakwani NC (1977) Applications of Lorenz curves in economic analysis Econometrica 45: 719–727Google Scholar
- Kolm S-C (1976) Unequal inequalities I. J Econ theory 12: 416–442Google Scholar
- Marshall AW, Olkin I (1979) Inequalities: Theory of majorization and its applications. Academic Press, New-YorkGoogle Scholar
- Moyes P (1987) A new concept of Lorenz domination. Econ Letters 23: 203–207Google Scholar
- Musgrave RA, Thin T (1948) Income tax progression: 1929–48. J Polit Econ 56: 498–514Google Scholar
- Rothschild M, Stiglitz J (1973) Some further results in the measurement of inequality. J Econ Theory 6: 188–204Google Scholar
- Shorrocks AF (1983) Ranking income distributions. Economica 50: 3–17Google Scholar