A Unified Theory of Tax Progressivity

43 Pages Posted: 16 Oct 2019 Last revised: 24 Oct 2019

See all articles by Manoj Viswanathan

Manoj Viswanathan

University of California Hastings College of the Law

Date Written: October 5, 2019


Tax progressivity is undeniably central to both the detailed analytics of tax policy and the rhetorical arguments commonly used in public discourse. Yet there are surprisingly inconsistent and inaccurate uses of this seemingly objective term. This Article adds analytical rigor to the conversations surrounding tax progressivity by theorizing its constitutive elements, providing an accurate framework for its assessment, and proposing tax policy designs to more easily measure it.

First, this Article makes the original observation that all progressivity assessments assume both a tax burden base (the attribute for which tax liability is determined) and a progressivity base (the attribute along which the distribution of the tax burden is assessed). Explicitly identifying these choices clarifies the normative assumptions inherent in progressivity assessments and helps reconcile contradictory assessments of the same tax provision.

Next, this Article argues that, as a theoretical matter, accurately characterizing tax provisions as progressive (or regressive) requires assessing their burdens beyond simply the tax payments remitted. By failing to account for effects such as economic incidence and inefficiency costs, traditional progressivity analyses are incomplete. Relatedly, since the spending side of the budget process is functionally indistinguishable from taxation, accurate progressivity analyses must also consider where tax revenues are spent.

Finally, this Article proposes that progressivity can be more exactly measured using earmarked tax assessments — taxes allocated to specific purposes rather than the general revenue fund. By connecting tax provisions to specific spending programs and their associated beneficiaries, more accurate progressivity calculations can be performed.

Keywords: tax policy

JEL Classification: K34

Suggested Citation

Viswanathan, Manoj, A Unified Theory of Tax Progressivity (October 5, 2019). UC Hastings Research Paper No. 365. Available at SSRN: https://ssrn.com/abstract=3465029 or http://dx.doi.org/10.2139/ssrn.3465029

Manoj Viswanathan (Contact Author)

University of California Hastings College of the Law ( email )

200 McAllister Street
San Francisco, CA 94102
United States

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