№ 2017/3
MacroeconomicsMERKULOVA 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 :514 |
| Article in Ukrainian (pp. 23 - 38) | Download | Downloads :456 |
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
English
Ukrainian 
