Personal Income Tax Progressivity: Trends and Implications

By Claudia Gerber, Alexander D Klemm, Li Liu, Victor Mylonas

November 20, 2018

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Claudia Gerber, Alexander D Klemm, Li Liu, and Victor Mylonas. Personal Income Tax Progressivity: Trends and Implications, (USA: International Monetary Fund, 2018) accessed November 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pre-tax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. Regressions do not reveal a significant impact of progressivity on growth, suggesting that efficiency costs of progressivity may be small—at least for degrees of progressivity observed in the sample.

Subject: Income distribution, National accounts, Personal income, Personal income tax, Progressive taxation, Social security contributions, Tax policy, Taxes

Keywords: Avg. wage, Avg. waget-5, Global, Growth, Income, Income category, Income distribution, Income taxation, Inequality, Labor income, OECD tax database data, Personal income, Personal Income Tax, Progressive tax system, Progressive taxation, Progressivity, Social security contributions, Tax rate, Tax Wedge, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/246
Stock No:

WPIEA2018246
ISBN:

9781484383087
ISSN:

1018-5941

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