Progressive Tax System Research Articles

Fighting Inequality Through a Progressive Tax System for a Just Future in Tanzania

The problem of inequality is one of the economic problems that developing countries still face including Tanzania. This research therefore focuses on presenting the status and trends of inequality and the progressive tax system to pay for a just future in Tanzania. Research was anchored on the Ability-to-Pay Principle. The study was typically a desk research whereby it dwelled on analyzing and synthesizing large amounts of complex secondary data/information and literature concerning the issue of inequality in Tanzania. The target population for this study consists of secondary data sources, which included Peer-reviewed journal articles on taxation and inequality Government reports and taxation data from the Tanzania Revenue Authority (TRA). A purposive sampling methodology was employed to choose relevant studies and reports. This approach ascertained that only sources directly related to the research goals were included. The sample consisted of 20 sources, selected based on criteria such as: Year of publication. Content analysis was adopted in analyzing data to discover themes, patterns and trends related to progressive tax systems, income inequality reduction, and wealth distribution. Key variables such as tax policies, inequality measures (Gini coefficient), and wealth distribution patterns were extracted and analyzed to determine the effectiveness of progressive taxation in Tanzania. Findings revealed that while progressive taxes can be a remedy, the presence of large informal sectors, as in Tanzania, hinder their reach. Thus, while Tanzania’s progressive tax structure holds potential, more reforms are in need to boost implementation alongside widening the tax base. Further, the study concluded that there is little wealth-related taxation in Tanzania. Also, assets such as land ownership or financial assets are hardly/not taxed. The study recommended that given the situation, there is a great need to improve the tax collection with a focus on the existing tax base in Tanzania.

Can revenue collection for public funding in health care be progressive? An assessment of 29 Countries

Most research on health care equity focuses on accessing services, with less attention given to how revenue is collected to pay for a country's health care bill. This article examines the progressivity of revenue collection among publicly funded sources: income taxes, social insurance (often in the form of payroll) taxes, and consumption taxes (e.g., value-added taxes). We develop methodology to derive a qualitative index that rates each of 29 high-income countries as to its progressivity or regressivity for each of the three sources of revenue. A variety of data sources are employed, some from secondary data sources and other from country representatives of the Health Systems and Policy Monitor of the European Observatory on Health Systems and Policies. We found that countries with more progressive income tax systems used more income-based tax brackets and had larger differences in marginal tax rates between the brackets. The more progressive social insurance revenue collection systems did not have an upper income cap and exempted poorer persons or reduced their contributions. The only pattern regarding consumption taxes was that countries that exhibited the fewest overall income inequalities tended to have least regressive consumption tax policies. The article also provides several examples from the sample of countries on ways to make public revenue financing of health care more progressive.

Is Indirect Taxes Bad for the Poor? Examining the Determinants of Poverty in Pakistan

This study investigates the determinants of poverty in Pakistan from 1985 to 2023, focusing on unemployment, inflation, indirect taxes, secondary school enrollment, and total population as key variables. Employing the Augmented Dickey-Fuller unit root test, the analysis finds that while many variables exhibit non-stationary behavior at levels, they become stationary at first difference, ensuring the reliability of time series analysis. The ARDL Bounds Analysis confirms the significant relationship between poverty and its predictors, indicating that changes in these variables markedly impact poverty levels. The estimated long-run and short-run results highlight the significant roles of inflation, secondary school enrollment, total population, and unemployment in influencing poverty, with diagnostic tests affirming the model's robustness. The study underscores the positive relationship between secondary school enrollment and poverty reduction, advocating for increased investment in education. The analysis reveals that indirect taxes do not significantly impact poverty levels, yet suggests a review of the tax structure to ensure it does not disproportionately burden low-income households. A progressive tax system could aid in wealth redistribution and support poverty reduction efforts. The positive correlation between total population and poverty levels indicates that rapid population growth strains resources and infrastructure, highlighting the need for effective population management strategies, including family planning programs and investments in healthcare and education. Unemployment's significant impact on poverty calls for targeted interventions to create job opportunities. Policymakers should promote economic diversification, support SMEs, and implement active labor market policies such as job training and placement programs. While higher inflation rates are associated with lower poverty levels in this analysis, maintaining inflation within a manageable range is crucial to avoid eroding purchasing power and harming economic stability. The study advocates for continuous and comprehensive data collection to enable timely and evidence-based interventions, enhancing the effectiveness of poverty reduction strategies. Prioritizing inclusive economic growth, fostering an environment conducive to investment, innovation, and entrepreneurship can create jobs and reduce poverty, ultimately supporting sustainable socio-economic development.

Fiscal policy and dimensions of inequality in South Africa: A time‐varying coefficient approach

AbstractSouth Africa continues to face high inequality levels despite its progressive tax and extensive social protection systems. We compare the dynamic impact of fiscal policy on the distribution of incomes, wages and wealth in South Africa from 1993 to 2019. For this purpose, we use a time‐varying parameter vector autoregression to estimate the impact of direct tax revenue and total transfer spending on three distinct inequality datasets. The analysis of various dimensions of inequality is the main contribution of the paper as the literature typically focuses on income inequality. A second contribution lies in the incorporation of time‐varying effects, which enables the analysis of the changing relationship between fiscal policy and inequality. The results suggest that this relationship is indeed time‐varying and that the impact of direct taxes and transfers differs markedly across the inequality dimensions, both in terms of magnitude and sign. Overall, we find that both transfers and direct taxes have not significantly reduced income, wage or wealth inequality in South Africa.

MACROECONOMIC IMPACTS OF PERSONAL INCOME TAX IN THE CONTEXT OF INCLUSIVE DISTRIBUTION OF INCOME AND OVERCOMING INEQUALITYV

The article examines the issues of the generation and distribution of labor income in the Republic of Armenia in the context of the experience and witnessed results of the application of various personal income tax regimes, particularly flat and progressive taxation systems. Based on the analysis of official statistics, main trends of inequality were observed, based on a number of tools used in scientific analysis: the Gini and Palma coefficients, as well as the Theil index. From the results of the study, it was found that the level of inequality in the country has decreased to some extent in the last two decades. At the same time, within the framework of the research, a simulation analysis was carried out and the methods of calculating the Lorenz curve and the Gini coefficient from the wellknown theoretical approaches to inequality assessment were applied in the case of flat and progressive taxation, using the personal income tax database of the RA State Re-venue Committee. Based on this method, as a result of the analysis, it was found that only the progressive taxation system has a certain positive impact in terms of alleviating in-come inequality, while the effect of flat taxation is insignificant.V

Effective salary policy as a component of the development strategy

The inefficient distribution of income in society creates a number of problems, the main of which are the following: approved social standards are at least two times lower than the actual value of the minimum consumer basket, half of the Pension Fund's income is formed at the expense of subsidies, and half of the country's households need subsidies to pay for housing and communal services. As a result, there is no solvent demand for goods and services on the market, which slows down the socio-economic development of the state. The need for radical improvement of the principles of income distribution in society determines the relevance of the research topic. The task is to determine the legal means of effective distribution of income in order to accelerate the socio-economic development of the state. The drivers of economic growth based on wages and/or profits of enterprises are analyzed. However, none of the possibilities will be realized in the absence of a stable or at least predictable exchange rate of the hryvnia, a progressive income tax system and fair market prices. The socialist ideology of the connection of wages with labor productivity, which is equated with labor intensity, does not allow to implement the optimal distribution of incomes and restrains the socio-economic development of the state. Labor productivity is determined by the level of production equipment and technology, the progressiveness of technological processes, the use of innovative materials, the introduction of patents and know-how, etc., which provides for higher qualification of personnel and higher wages and determines the direction of using the received profits and attracting investments. The regulator of the use of profits is the tax system and progressive tax rates. Income distribution in society should be determined by acceptable social standards and ensured by the application of progressive personal income tax rates. Amendments to the Tax Code of Ukraine have been proposed, which will ensure the solution of the set tasks

ECONOMIC GROWTH OR REGRESS – SCENARIOS AND BIBLIOMETRIC ANALYSIS ON SINGLE TAXATION VS. PROGRESSIVE TAXATION

The discussion on single taxation vs. progressive taxation returns periodically and always in times of budgetary crisis, which in turn induces the economic crisis and not the other way around, as normal. The purpose of this article is to observe the evolution of taxation in progressive tax rates compared to taxation in single rates in Romania, but also in other European countries. The research methodology involved the qualitative analysis of the various scenarios, already existing at national and international level on the single taxation vs. progressive taxation, as well as documentation by quantitative analysis of the focus of literature on the evolution of taxation in progressive quotas. Following the analysis, it was found that the tax system in progressive quotas existing in Romania until 2004 generated a low level of revenues to the budge. In many European countries, however, a progressive taxation system is applied, which reinforces the OECD’s assertion that there is no tax system „unique to all”.

Free Trade: A Policy Reformation


 
 
 
 
 
 This article proposes a solution to the challenges posed by free trade on domestic industries, particularly in the United States' manufacturing sector. The solution involves implementing a progressive tax system to tax corporations benefiting from free trade more heavily and utilizing the additional revenue to enhance Trade Adjustment Assistance (TAA) programs. The TAA programs will offer resources and training to displaced workers, facilitating their transition to other industries and increasing reemployment rates and wage replacement. Despite potential drawbacks, such as resistance from high-earning individuals and implementation costs, the overall benefits of the proposed TAA expansion outweigh the negatives. The article emphasizes the policy's alignment with Rawls' theory of justice as fairness and suggests that it is politically feasible and likely to gain international support due to its commitment to trade liberalization. The proposed approach aims to strike a balance between promoting free trade and protecting worker welfare.
 
 
 
 
 
 
 
 

Progressive income tax and comparative advantage in trade

This study examines how a nation’s progressive personal income tax system impacts its comparative advantage in industries characterized by a large share of high-income occupations. While prior research has explored the economic consequences of income tax policies, little is known about their specific implications for a country’s competitive edge in international trade. We employ comprehensive world trade data to investigate the relationship between income tax progressiveness and industry competitiveness. Our analysis reveals that countries with more progressive income tax systems tend to exhibit comparative disadvantages in industries prominently featuring high-income occupations, including high-tech and professional services. This phenomenon can be attributed to a key mechanism: progressive income tax policies alter occupational choices by discouraging high-income pursuits, ultimately eroding the competitiveness of industries that heavily rely on these occupations. This research underscores the importance of policymakers considering the unintended consequences of income tax progressiveness on industry competitiveness in the global market.

Taxation, health system endowment and institutional quality: ‘Social media’ perceptions across Europe

In this paper we analyse how health system endowment and the quality of institutions impact perceptions towards taxation. We conduct a sentiment analysis of Twitter users' tweets to determine whether the impact of the Covid-19 health emergency has modified the attitudes of the citizens towards taxation in the four largest European countries: France, Germany, Italy and Spain. We use a difference-in-differences estimation strategy, comparing the average sentiments of individual tweets regarding taxation in different European NUTS-2 regions, before and after the spread of the Covid-19 pandemic. Our results highlight that in regions characterised by higher health system endowment people adopted more positive attitudes towards taxation with respect to those living in regions with low levels of health system endowment over the period 2019-2020. In addition, we show how higher quality institutions led to more positive perceptions in relative and absolute terms, suggesting a greater predisposition for a more progressive tax system.

Strategies for Implementing Progressive Law for Societal Development and Economic Growth

The concept of progressive law is placed in a sociological perspective where law is directed to serve the interests of society. This research aims to create a more just, sustainable and participatory economy for Indonesian society, by placing sustainability as the main focus. This research identifies the challenges faced by Third World countries, especially in the context of globalization which leads to the domination of global economic actors over resources and markets. This has led to social stratification that is increasingly felt globally, increasing inequality and presenting sustainability and justice issues. Furthermore, concrete steps are needed to improve the legal system and mechanisms that support progressive economic development, including optimizing the Anti-Monopoly Law to prevent economic concentration, as well as implementing a progressive tax system to create a fairer distribution of wealth. In addition, this research encourages the active role of local governments, community-based market mechanisms, and community agricultural development.

Economy-Finance-Environment-Society Interconnections In a Stock-Flow Consistent Dynamic Model

ABSTRACT This work takes inspiration from four theoretical strands: recent developments in ecological macroeconomics; the Schumpeterian framework of evolutionary economics that emphasises the entrepreneurial role of the State; the stock-flow consistent approach to macroeconomic modelling; and the supermultiplier model. Building upon these approaches, we develop a formal model that reproduces key interactions between the economy, the financial sector, the ecosystem and the society. We test and assess the effects of several fiscal policies. We find that, in principle, mission-oriented innovation policies are the most effective option in supporting innovation and growth, while reducing income inequality. However, lacking a ‘green’ and progressive taxation system, they are unlikely to reverse the current trend in atmospheric temperature.

The elite, inequality and the emergence of progressive taxation

This paper explores theoretically the role of the ruling elites in the rise of progressive taxation in Western countries in the early 20th century. We focus on their interaction with the level of inequality between the elites and other citizens. We analyse a stylized political economy dynamic model where (wealthy) elite make a decision on the taxes to be paid by non-elite (poorer) citizens and by themselves. A fraction of citizens are fiscal-reciprocators: they experience positive (negative) reciprocity under a progressive (regressive) tax system. This proportion of citizens evolves over time according to their relative payoff compared to materialist citizens. We show that the choice of tax structure depends on the value for the elite of the public good generated by tax revenues, the proportion of fiscal-reciprocators and on the level of inequality between elite and citizen incomes. Our results show a dynamic complementarity between the level of reciprocity in society and tax progressivity. Indeed, this complementarity only operates if inequality is sufficiently low. In this case a progressive tax culture will be achieved, otherwise a regressive tax culture will prevail.

Fiscal expansion, government debt and economic growth: a post-Keynesian perspective

Constructing a post-Keynesian macro-model, we investigate the impact of fiscal expansion on aggregate demand and economic growth, explore public debt sustainability, and analyze whether fiscal policy plays any role in stabilizing the economy. We explore how the interaction between capital accumulation and government debt opens the possibility of multiple equilibria and instability in the economy. We investigate the impact of various parameters on short-run aggregate demand and long-run equilibrium growth rate, and public debt-capital ratio. We explore the relationship between a progressive tax system and a wage-led demand regime. In some cases, a sufficiently high government expenditure to GDP ratio is essential for achieving stability in the system. A sufficiently high government expenditure to GDP ratio ensures economic stability in other circumstances. The possibility of the limit cycle is also explored. Higher autonomous investment demand is desirable as it enhances the stable region of the economy.

A New Perspective on Historical Theories of Poverty

The current study aims to examine poverty theories in light of new perspectives and approaches. The methodology used for this research, that is solely qualitative, is based on the literature. The study explores a variety of theories on poverty, including classical, neoclassical, Keynesian, Marxist/radical, monetary, cultural, ecological, economic, political and the theory of social exclusion and social capital. Some policy measures are suggested to overcome poverty such as economic growth must benefit all citizens through progressive tax systems, education, health, and work opportunities, improving infrastructure and local industries competitiveness, increased transparency, stricter enforcement, and strengthening of institutions to prevent corruption, encourage political participation through voter education, parties, and debate, encourage trade, investment, renewable energy sources, and self-help strategies to reduce poverty.

Summaries of Articles

Summaries of Articles

Worldwide Fiscal Progressivity: What can we Learn from Subjective Wellbeing Economics?

The link between fiscal progressivity and subjective well-being at global level is an issue that has hardly been considered in the literature on the Economics of Happiness. Oishi et al. (2012) is almost the only work in this field, and they concluded that those countries which had more progressive income tax systems were also happier. Our work use their definition of progressivity as the difference between the upper and lower marginal rate on income, in order to prove its relationship with subjective well-being (SWB), but we have observed that such indicator is not very significant for a sample of 111 countries. Besides, we conclude that the fact that a country's maximum income tax rate is high turns out to have a strong influence on the declared subjective well-being of its citizens. One possible explanation for it could be that they are countries with a high GDP per capita in which disposable income after taxes remains high. However, it must be taken into account that in our work we have managed to isolate the influences that the GDP per capita variable could have using the principal component analysis method.

Disparities and Inequities in US Health Care: Alive and Sick.

Disparities and inequities based on ethnic and racial differences have been a part of health care in America from the time of its founding. These disparities have persisted through recurrent efforts to reform our health care system. This article brings historical perspective to what has become a systemic part of US health care; examines the extent of disparities today as they impact access, quality, and outcomes of care; and considers what can be done within our polarized political environment to eliminate them. It is hoped that this can help to spark dialogue within our discipline on these matters of critical importance. A single-payer national health insurance program, whereby all Americans can access affordable care based on medical need instead of ability to pay, can help to move our current nonsystem toward health equity. This change can bring improved health care to all Americans with simplified administration, cost containment, and less bureaucracy. It can be financed through a progressive tax system whereby 95% of Americans pay less than they do now and receive more in return. The past is never dead. It's not even past.1-William Faulkner.

THE PARALLEL MARCH OF THE GINIS How does taxation relate to inequality, and what can be done about it?

THE PARALLEL MARCH OF THE GINIS How does taxation relate to inequality, and what can be done about it?

The Inherent Conflict Between Progressive Tax Rates and Income Inequality: Lessons from COVID-19 Restrictions

ABSTRACT We examine the relation between progressive tax rates, income inequality, and state income tax collections. We provide evidence that states with more progressive tax rate structures have higher tax collections. We then show an enhanced relation for states that enacted more stringent COVID-19 restrictions, which increased income inequality. Finally, we find that restrictions were more severe in states with more progressive tax rates. Our evidence sheds light on the inherent conflict between progressive tax structures and income inequality—income inequality increasing policies result in higher tax collections with a progressive tax system even though the latter aims to address income inequality. JEL Classifications: D63; H24; H31; H51; H53; H71.