How Progressive is Progressive Taxation? An Axiomatic Analysis

Abstract

There is a consensus in the general public that income taxes should be everywhere progressive. Starting from the basic properties normally required, we examine the possibilities of designing everywhere progressive income tax schedules. An axiomatic analysis investigates the (in)consistency of these requirements with further restrictions on the degree of progression. It turns out that everywhere progressive tax schedules have to be maximally progressive or almost proportional in some income range.