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Measuring the Redistributive Capacity of Tax Policies
Author:
Charles Vellutini
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Juan Carlos Benitez
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 252
Language:
English
Publication Date:
22 Oct 2021
DOI:
https://doi.org/10.5089/9781589064089.001
ISBN:
9781589064089
ISSN:
1018-5941
Pages:
28
Keywords:
Income distribution; redistribution; progressivity; personal income tax; novel technique; PIT redistribution; TRANSPLANT-AND-COMPARE method; PIT Progressive; market income Gini Coefficients; Income distribution; Income; Personal income tax; Progressive taxation; Income inequality; Global
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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.
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This paper presents a novel technique to measure and compare the redistributive capacity of observed tax (or transfer) policies. The technique is based on income distribution simulations and controls for differences in pre-tax income distributions. It assumes that the only information on the pre-tax distribution available in each country-year is the Gini coefficient and the mean (GDP per capita). We illustrate the technique with an application to the personal income tax, using a dataset of 108 countries over the 2007-2018 period.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund