American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Inequality, Bipolarization, and Tax Progressivity
American Economic Journal: Microeconomics
vol. 13,
no. 4, November 2021
(pp. 492–513)
Abstract
The steady rise in income and wealth inequality in the last four decades, together with the evolution of a vanishing middle class, has raised concerns about potentially pernicious effects of these trends on social stability and economic growth. This paper evaluates the possibility of designing tax systems aimed at reducing income inequality and bipolarization. Using two fundamentally different metrics, we provide a unified foundation of tax progressivity whereby, roughly, taxes are progressive if and only if they are inequality reducing; and taxes are inequality reducing if and only if they are bipolarization reducing.Citation
Carbonell-Nicolau, Oriol, and Humberto Llavador. 2021. "Inequality, Bipolarization, and Tax Progressivity." American Economic Journal: Microeconomics, 13 (4): 492–513. DOI: 10.1257/mic.20190111Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- H22 Taxation and Subsidies: Incidence
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
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