| 来源类型 | Article |
| 规范类型 | 评论 |
| An Investigation of State Tax Progressivity | |
| Alan D. Viard; Cody Kallen; Sita Nataraj Slavov | |
| 发表日期 | 2017-09-18 |
| 出版年 | 2017 |
| 语种 | 英语 |
| 摘要 | Cody F. Kallen is a research associate at American Enterprise Institute. Sita N. Slavov is a professor of public policy at the Schar School of Policy and Government at George Mason University and a visiting scholar at AEI. Alan D. Viard is a resident scholar at AEI. The authors thank Alex Brill for helpful comments and Michael Ettlinger for assistance in obtaining part of the data used in this article. The views expressed in this article are those of the authors and do not reflect the views of any other person or any institution. In this article, Kallen, Slavov, and Viard review statistical measures of income inequality and tax progressivity to analyze the progressivity and size of state tax systems. In this article, we review statistical measures of income inequality and tax progressivity and use data from the Institute on Taxation and Economic Policy (ITEP) to analyze the progressivity and size of state tax systems. In line with ITEP’s conclusions, we find that most state tax systems are regressive. We also find that Democratic-leaning states tend to have larger and less regressive tax systems, but we otherwise find few factors that are systematically related to tax progressivity. States that rely on income taxes tend to have less regressive tax systems compared with other states. Measures of Inequality and Progressivity A tax system’s progressivity measures the extent to which taxes are a larger share of income for higher-income households. The progressivity of a tax system can be evaluated by comparing the distribution of tax payments with the distribution of income. A tax system is progressive if higher-income individuals bear a larger share of the tax burden compared with their share of total income and is regressive if the reverse is true. We therefore begin by discussing the measurement of income inequality. Inequality A common measure of income inequality is the Gini coefficient, which ranges from zero (the value that would prevail if all incomes were equal) to one (the value that would prevail if a miniscule fraction of the population received all of the income). The Gini coefficient is the sum of n values where n is the population. To obtain the first term in the sum, subtract the poorest individual’s share of society’s total income from her share of the population (1/n). To obtain the second term in the sum, subtract the combined share of total income for the poorest two individuals from these two individuals’ population share (2/n) and so on. The last term, which is the combined population share for all individuals minus the combined share of income for all individuals, must be zero because the entire population (100 percent) earns all of society’s income (100 percent). Because the population shares and the income shares would be the same if everyone had the same income, each term is a measure of the cumulative deviation from equality. Adding up all of the terms, dividing by the population size, and multiplying by two yields the Gini coefficient. The Gini coefficient can also be understood graphically. Figure 1 shows the distribution of before-tax income (including cash transfers) for U.S. households, based on the income shares by quintile reported by the U.S. Census Bureau for 2015. Each circular marker along the dotted line represents the cumulative share of total income for the share of the population indicated on the horizontal axis. For example, the bottom 20 percent of the population earns 3.1 percent of total income and the bottom 40 percent of the population earns 11.3 percent of total income. The dotted line — known as a Lorenz curve — interpolates between these points to approximate the income shares at intermediate values. The solid 45-degree line labeled “perfect equality” represents the Lorenz curve that would exist if income were distributed equally. If the number of individuals in society is very large, the Gini coefficient is equal to twice the area between the perfect-equality 45-degree line and the Lorenz curve. Progressivity A tax system’s progressivity depends on the shares of taxes paid by different income groups relative to their shares of income. For example, if high-income households pay 30 percent of total taxes, that could occur because high-income households have 20 percent of total before-tax income and the tax system is progressive, because they have 30 percent of total before-tax income and the tax system is proportional, or because they have 40 percent of total before-tax income and the tax system is regressive. A common measure of progressivity is the Kakwani index, which equals the concentration coefficient for taxes minus the Gini coefficient for before-tax income. The concentration coefficient for taxes is similar to a Gini coefficient for tax payments, as it measures inequality in tax burdens, but the computation ranks individuals by before-tax income rather than by taxes paid. The Kakwani progressivity index is the difference between the tax concentration coefficient, which is a measure of income groups’ shares of total taxes, and the Gini coefficient for before-tax income, which is a measure of income groups’ shares of total before-tax income. In accord with the previous discussion, progressivity depends on a comparison of tax shares and income shares. If each individual’s tax share equals his income share (for example, if an individual who earns 10 percent of the total income pays 10 percent of total taxes), the Kakwani index is zero and the tax system has no progressivity. If the tax shares are distributed less equally than before-tax income shares, so that high-income individuals pay a greater share of total taxes than their share of total before-tax income, the Kakwani index is positive and the tax system is progressive. If high-income individuals pay a smaller share of total taxes than their share of total before-tax income, the Kakwani index is negative and the tax system is regressive. Size of Tax System The amount of redistribution, or reduction in income inequality, caused by a fiscal system partly depends on the progressivity of its tax system. But it also depends upon the size of government, namely the size of taxes and the size of the transfer payments financed by the taxes, and on the progressivity of the transfer payments. A common measure of the redistribution induced by a tax system is the Reynolds-Smolensky index, which equals the difference between the Gini coefficient for before-tax income and the Gini coefficient for after-tax income. Mathematically, the Reynolds-Smolensky index is equal to the progressivity of the tax system (measured by the Kakwani index) multiplied by its size. A similar formula expresses the redistribution achieved by transfer payments as the progressivity of transfer payments multiplied by their size. As discussed below, most state tax systems are regressive; that is, they have negative Kakwani indexes. Because a regressive tax system in isolation increases income inequality, making the tax system bigger would appear to cause an even larger increase in inequality. However, the transfer payments financed by the tax system are surely progressive and therefore reduce inequality. (It is important to recognize that transfer payments are progressive and reduce income inequality even if higher-income people receive larger payments, provided that the payments rise less than proportionately with income.) Scaling up a regressive tax system through an across-the-board tax hike would increase the negative redistribution induced by the tax system but would almost always increase the positive redistribution induced by the entire fiscal system. Because the ITEP data do not include transfer payments, we cannot directly measure the contribution that increasing the size of government makes to redistribution. Nevertheless, we view both an increase in the size of the tax system and an increase in its progressivity as ways to increase redistribution. Our investigation therefore looks at both progressivity and the size of taxes and examines the relationship between them. |
| 主题 | Economics ; Public Economics |
| 标签 | Fiscal policy ; progressive tax ; State taxes |
| URL | https://www.aei.org/articles/an-investigation-of-state-tax-progressivity/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/262951 |
| 推荐引用方式 GB/T 7714 | Alan D. Viard,Cody Kallen,Sita Nataraj Slavov. An Investigation of State Tax Progressivity. 2017. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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