Abstract
We propose a procedure for measuring the effect of systematic discrimination in the income tax. Different socioeconomic groups are assumed to face different tax schedules. We show that a welfare loss is caused by the group specificity of schedules, the dollar value of which is our measure of discrimination. Defining vertical equity as the dollar value of the tax system's welfare superiority over an equal yield flat tax, discrimination equates to a loss in vertical equity. The Australian income tax is found to discriminate against wage and salary earners, causing a roughly 1% loss of social welfare in 1984.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
