Cover IMF Working Papers
Buy Book in Print
An Application of Distribution-Neutral Fiscal Policy
Author:
Mr. Sanjeev Gupta
Search for other papers by Mr. Sanjeev Gupta in
Current site
Google Scholar Close
,
Sugata Marjit null

Search for other papers by Sugata Marjit in
Current site
Google Scholar Close
, and
Sandip Sarkar null

Search for other papers by Sandip Sarkar in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 012
Language:
English
Publication Date:
24 Jan 2018
DOI:
https://doi.org/10.5089/9781484338568.001
ISBN:
9781484338568
ISSN:
1018-5941
Pages:
21
Keywords:
WP; Lorenz curve; inequality measure; Strong Pareto Superiority; Inequality; Compensation mechanism; SPS allocation; income distribution; income quantile; salary income; Income inequality; Personal income; Income distribution; Estate tax
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (1.4 MB) Download Epub
Distribution neutral fiscal policy refers to a structure of taxes and transfers that keep the income distribution unchanged even after positive or negative shocks to an economy. This is referred to as a Strong Pareto Superior (SPS) allocation which improves the standard Pareto criterion by keeping the degree of inequality, but not the absolute level of income intact. We apply this methodology to India to compute SPS tax rates and determine their proximity to actual tax rates. Limited available data on income and expenditure shows that the official policies so far are close to desired benchmark level. Our methodological contribution will be enriched further with more detailed income tax and transfer data.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund