Base independence in the analysis of tax policy effects: with an application to Norway 1992–2004
Working paper
Åpne
Permanent lenke
http://hdl.handle.net/11250/180141Utgivelsesdato
2005Metadata
Vis full innførselSamlinger
- Discussion Papers [1000]
Sammendrag
Abstract:
The analysis contrasts results of two recently expounded micro-level data approaches to derive
robust intertemporal characterizations of redistributional effects of income tax schedules; the fixedincome
procedure of Kasten, Sammartino and Toder (1994) and the transplant-and-compare method
of Dardanoni and Lambert (2002). Our study is normative in that the Blackorby and Donaldson
(1984) index of tax progressivity is employed. This enables contributions from vertical redistribution
and horizontal inequity also to be assessed, using for the latter one classical measure and one no
reranking measure. When the competing methodologies are applied to Norwegian data for 1992–
2004, their respective strengths and weaknesses are revealed. The transplant-and-compare
procedure is found to have a number of advantages.
Keywords: Income tax; Tax progressivity; Horizontal inequity