Articles by : Iantsevich A. -№ 3/2017
MacroeconomicsIANTSEVICH A. -1, MERKULOVA Tamara 2
1Kharkiv Karazin National University
2Kharkiv Karazin National University
IMPACT OF PROGRESSIVE TAXATION ON INEQUALITY: ANALYZING THE INEQUALITY DEPENDENCE ON INCOME DISTRIBUTION PARAMETERS AND TAX PROGRESSION
| Ekon. teor. 2017; 3:23-38 | |
ABSTRACT ▼
The article presents an investigation of the direct influence of progressive tax on income distribution and inequality. The case of lognormal distribution and a tax power function is considered. The coefficient Gini is applied to measure income inequality. It is shown that given progressive tax function doesn’t change the initial income distribution law: it will be lognormal with parameters depending on initial distribution parameters, tax progression and non-taxable income. The obtained mathematical dependences allow analyzing each parameter’s influence on net income distribution and reducing inequality. It is found out that the dependence of Gini coefficient on tax progression is linear if the distribution parameter is a small values (a distribution has a small dispersion), and non-linear at big values. The applications of the obtained theoretical findings are presented with a case study on Ukraine.
Keywords:progressive income tax, lognormal distribution, income inequality, Gini coefficient
JEL: D31, C46
REFERENCES ▼
Merkulova, T.V. (2016). Spravedlyvist, nerivnist i ekonomichna efektyvnist: analiz ta modeliuvannia vzaiemozviazkiv [Justice, inequality and economic efficiency: analysis and modeling of interconnections]. Ekonomichna teoriia. № 4, 77–86. (In Ukrainian)
Moroz, K.V. (2016). Rozpodil hroshovykh dokhodiv naselennia Ukrainy: empirychnyi analiz z vykorystanniam lohnormalnoi funktsii [Monetary income distribution in Ukraine: empirical analysis using the lognormal function]. Visnyk Kharkivskoho natsionalnoho universytetu imeni v. N. Karazina. vyp. 91, 110–117. (Seriia: Ekonomichna) (In Ukrainian)
Stiglic, Dzh. A. (2015). Cena neravenstva: chem rassloenie obshhestva grozit nashemu budushhemu. [The price of inequality: How today's divided society endangers our future]: per. s angl. moskva: jeksmo. 512 p. (In Russian)
Antony, B. (1970). Atkinson. On the Measurement on Inequality. Journal of Economic Theory. № 2, 244–263.
Borge, Lars-Erik, J.Jorn Rattso. (2004). Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis. European Economic Review. 48(4), 805–826.
Duncan, D., Sabirianova Peter, K. (2016). Unequal inequalities: Do progressive taxes reduce income inequality. International Tax and Public Finance. Vol. 23, issue 4, 762–783. URL:
link.springer.com/article/10.1007/s10797-016-9412-5.
Gionanny, Vecchi. Measuring, Inequality. 2008. URL:
siteresources.worldbank.org/PGLP/Resources/inequality_measurement.pdf.
Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review. Vol. 45. No 1, 1–28.
Fanti, L., Manfredi, P. (2003). Progressive Income Taxation and Economic Cycles: a Multiplier-Accelerator Model. Discussion Papers del Dipartimento di Scienze Economiche. Universit? di Pisa. URL:
www-dse.ec.unipi.it/ricerca/discussion-papers.htm.
Mirrlees, J. A. (1971). An Exploration in the Theory of Optimum Income Taxation. Review of Economic Studies. 38(114), 175–208.
MERKULOVA Tamara 1, IANTSEVICH A. -2
1Kharkiv Karazin National University
2Kharkiv Karazin National University
Impact of progressive taxation on inequality: analyzing the inequality dependence on income distribution parameters and tax progression
ABSTRACT ▼
The article presents an investigation of the direct influence of progressive tax on income distribution and inequality. The case of lognormal distribution and a tax power function is considered. The coefficient Gini is applied to measure income inequality. It is shown that given progressive tax function doesn’t change the initial income distribution law: it will be lognormal with parameters depending on initial distribution parameters, tax progression and non-taxable income. The obtained mathematical dependences allow analyzing each pa-rameter’s influence on net income distribution and reducing inequality. It is found out that the dependence of Gini coefficient on tax progression is linear if the distribution parameter is a small values (a distribution has a small dispersion), and non-linear at big values. The applications of the obtained theoretical findings are presented with a case study on Ukraine
Keywords: progressive income tax, lognormal distribution, income inequality, Gini coefficient.
JEL: D31, C46
| Article in Russian (pp. 23 - 38) | Download | Downloads :522 |
| Article in Ukrainian (pp. 23 - 38) | Download | Downloads :459 |
REFERENCES ▼
1. Merkulova, T.V. (2016). Justice, inequality and economic efficiency: analysis and modeling of interconnections. Ekon. teor. – Economic theory, 4, 77-86 [in Ukrainian].
2. Moroz, K.V. (2016). Monetary income distribution in Ukraine: empirical analysis using the lognormal function. Visnyk Kharkivskoho natsionalnoho universytetu imeni V.N. Karazina. Seriia: Ekonomichna – Bulletin of Kharkiv National University named after V.N. Karazin. Series: Economical, 91, 110-117 [in Ukrainian].
3. Stiglitz, Joseph E. (2015). The price of inequality: how today’s divided society endangers our future. Moscow: Jeksmo. (Top Economics Awards) [in Russian].
4. Atkinson, Antony B. (1970). On the measurement of inequality. Journal of Economic Theory, 2, 244-263. doi:
https://doi.org/10.1016/0022-0531(70)90039-6">doi.org/10.1016/0022-0531(70)90039-6">https://doi.org/10.1016/0022-0531(70)90039-6
5. Borge, Lars-Erik, Rattso, J. Jorn (2004). Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis. European Economic Review, 48(4), 805-826. doi:
https://doi.org/10.1016/j.euroecorev.2003.09.003">doi.org/10.1016/j.euroecorev.2003.09.003">https://doi.org/10.1016/j.euroecorev.2003.09.003
6. Duncan, D., Sabirianova, Peter K. (2016). Unequal inequalities: Do progressive taxes reduce income inequality. International Tax and Public Finance, 23: 4, 762-783. doi:
https://doi.org/10.1007/s10797-016-9412-5">doi.org/10.1007/s10797-016-9412-5">https://doi.org/10.1007/s10797-016-9412-5
7. Gionanny, Vecchi. (2008). Measuring, Inequality. Retrieved from
siteresources.worldbank.org/PGLP/Resources/inequality_measurement.pdf
8. Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45: 1, 1-28.
9. Fanti, L., Manfredi, P. (2003). Progressive Income Taxation and Economic Cycles: a Multiplier-Accelerator Model. Discussion Papers del Dipartimento di Scienze Economiche. Università di Pisa. Retrieved from
www.dse.ec.unipi.it/ricerca/ discussion-papers.htm
10. Mirrlees, J.A. (1971). An Exploration in the Theory of Optimum Income Taxation. Review of Economic Studies, 38(114), 175-208. doi:
https://doi.org/10.2307/2296779">doi.org/10.2307/2296779">https://doi.org/10.2307/2296779
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