The name is absent



In this paper we define a bi-dimensional progression measure which is needed to establish
the Lorenz dominance criterion among post-tax income distribution. To do this, the dual tax
cuts must be simultaneously labor and capital yield-equivalent. Moreover, the relative order
of both labor and capital income distribution must coincide. We set up a lattice whereby
Pfahler-type linear tax refoms are compared.

Finally, by means of a microsimulation model and a large dataset of income tax payers we
empirically illustrate the effect of linear tax cuts on dual taxes. Our analysis is carried out to
focus on redistribution and progressivity effects as well as the elasticity of the tax functions.

7 Appendix

7.1 Theoretical part

Remark 1

Consider a unidimensional tax schedule defined by

m+1

T (x) =     Ti(x)

i=0

where 0 < t1 < ... < tm < tm+1 1 are the marginal types, 0 = x0 < x1 < ... < xm <
x
m+1 = are the marginal incomes and

Ti(x) = max {0, min{xi xi-1, x xi-1}} ∙ ti

for all i, 1 i m + 1. We say that T(x) is a stepwise tax schedule.

It can be easily checked that T(x) is progressive and convex. Further, given a linear tax
reform
t'(x) = d t(x) + h defined on the average type t(x) = T(x)/x we next prove that the
new tax schedule is stepwise where 0
< d t1 + h < ... < d tm + h<d tm+1 + h < 1 are the
marginal types and 0 =
x0 < x1 < ... < xm < xm+1 = are the marginal incomes.

30



More intriguing information

1. The name is absent
2. The name is absent
3. Testing Gribat´s Law Across Regions. Evidence from Spain.
4. Subduing High Inflation in Romania. How to Better Monetary and Exchange Rate Mechanisms?
5. The name is absent
6. Evaluation of the Development Potential of Russian Cities
7. Ex post analysis of the regional impacts of major infrastructure: the Channel Tunnel 10 years on.
8. Towards Teaching a Robot to Count Objects
9. Competition In or For the Field: Which is Better
10. Restructuring of industrial economies in countries in transition: Experience of Ukraine
11. The name is absent
12. The Impact of Hosting a Major Sport Event on the South African Economy
13. The name is absent
14. Declining Discount Rates: Evidence from the UK
15. Are combination forecasts of S&P 500 volatility statistically superior?
16. The name is absent
17. Investment in Next Generation Networks and the Role of Regulation: A Real Option Approach
18. The purpose of this paper is to report on the 2008 inaugural Equal Opportunities Conference held at the University of East Anglia, Norwich
19. The name is absent
20. The name is absent