MARGINAL TAX RATES AND THE MEASUREMENT OF TAX PROGRESSIVITY

Abstract

The paper proposes an alternative way of defining tax progressivity, one in which it becomes a function of marginal, not average tax rates. Changes in Tax Progressivity are then related to modifications in the distribution of pre-tax incomes or to variations in marginal rates. Using Israel’s Wage and Insurance Data File for the year 1993, the empirical analysis checks the impact of the 1995 Law for the Reduction of Poverty and Income Disparities on the progressivity of the National Insurance Tax System. Simulations are also conducted to study the effect of alternative policies.

Citation

Achdut, L., Awad, Y. and Silber, J. (2003), "MARGINAL TAX RATES AND THE MEASUREMENT OF TAX PROGRESSIVITY", Amiel, Y. and Bishop, J.A. (Ed.) Fiscal Policy, Inequality and Welfare (Research on Economic Inequality, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 21-43. https://doi.org/10.1016/S1049-2585(03)10002-6