Structural Progression Measures for Dual Income Tax Systems
Working Paper 2012-269
The structural progression of an income tax schedule measures how liabilities change with changes in the income being taxed. This paper extends the measurement of structural progression to a pure-form dual income tax (DIT) system, which combines progressive taxation of labour income with proportional taxation of income from capital at a lower rate. Firm links are obtained between structural progression and revenue responsiveness for a DIT, and we demonstrate how structural progression measures can aid in redistributive analysis, using Nordic data to highlight problems which can stem from pretax distributional changes. We conclude with an assessment of the new theoretical and
Authors: Arnaldur Sölvi Kristjánsson, Peter J. Lambert.