International Monetary Fund, University of Essex and Institute for Fiscal Studies

Posted: 1 Aug 2000

See all articles by Michael Keen

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS)

Anthony Shorrocks

United Nations - World Institute for Development Economics Research (UNU/WIDER)

Harry Papapanagos

University of Macedeonia in Thessaloniki - Dept. of Balkan - Slavic & Oriental Studies

Abstract

The established theory of tax progressivity cannot handle basic tax reform questions, such as whether an increase in personal allowances makes the tax system more progressive, because the core results assume that tax liability is never zero. This paper generalises the core theory to allow for zero tax payments, and applies the new framework to the analysis of allowances, income-related deductions and tax credits. Log concavity of the tax schedule - a property quite distinct from any existing notion of progressivity - emerges as the critical determinant of whether the distribution of the tax burden becomes more progressive as allowances are increased.

JEL Classification: H21, H22

Suggested Citation

Keen, Michael and Shorrocks, Anthony and Papapanagos, Harry, International Monetary Fund, University of Essex and Institute for Fiscal Studies. The Economic Journal, Vol. 110, Issue 460, January 2000. Available at SSRN: https://ssrn.com/abstract=233420

Michael Keen (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Anthony Shorrocks

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Harry Papapanagos

University of Macedeonia in Thessaloniki - Dept. of Balkan - Slavic & Oriental Studies

156 Egnatia St.
P.O. 1591
Thessaloniki, 54006
Greece
+30 2310 891471 (Phone)
+30 2310 891377 (Fax)

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