Progressive Tax Research Articles

Incomes and income inequality in Stockholm, 1870–1970: Evidence from micro data

This paper analyzes incomes and income inequality in Stockholm from 1870 to 1970. The paper builds on a new dataset of 38,022 randomly sampled Stockholm residents 1870–1950, with information on income, occupation, age, gender, and household composition. This is complemented by the Census of 1930 and a Statistics Sweden sample for 1960 and 1970. Incomes were very unequally distributed between 1870 and 1920, with Gini coefficients of pre-tax income around sixty. After 1920 inequality fell quite steadily. A drop in capital incomes contributed, and when looking at post-tax incomes the growth of progressive taxation after 1930 also contributed, but most of the high inequality up to 1920 and equalization after this date depended on the distribution of labour income. In the early 1900s professional groups had huge income advantages over workers, but this advantage was drastically reduced after 1920 when working-class incomes grew rapidly. An important mechanism of income growth was the upgrading of the jobs structure, highlighting the importance of structural change, beyond the Kuznetsian binary of agriculture–manufacturing, for understanding long-run economic inequality.

Economic interests, taxation and justice

Methods. During the research, the following methods were used: logical and historical – when studying the evolution of thinkers’ views on the concept of justice in the context of taxation; abstraction – when defining the category «justice in taxation»; dynamic series – when determining modern trends in the dynamics of tax revenues to the state budget; general and specific – when comparing the taxation structure of some countries, which distinguish the creative economy from other types of economic systems; analysis and synthesis – when forming a categorical series of related concepts. Results. The article defines the role of social justice as one of the fundamental principles of taxation in ensuring tax modernization of Ukraine. The contradictory nature of concepts of justice applied in the field of taxation was revealed, the concept of «justice in taxation» was defined. Modern trends in the dynamics of tax revenues to the state budget of Ukraine are singled out, their structure is presented in both absolute and relative dimensions. A comparison of the positions of Ukraine in terms of the structure of collected taxes with the OECD countries was carried out. It was concluded that the structure of tax revenues of our state reflects the world trend regarding the spread of VAT, but the share of collected taxes on consumption in Ukraine is higher, while the share of taxes on income is lower compared to OECD countries. It is emphasized that the best theory of taxation needs effective implementation. Therefore, the development of tax policy should carefully consider the administrative aspect of taxation. Novelty. The role of the principle of justice in the fiscal menu of the times of martial law has been defined, proposals have been made regarding the directions of reforming the taxation system in Ukraine, namely: progressive taxation of the incomes of individuals, elimination or limitation of unequal opportunities for tax evasion and improvement of administration. Practical value. Proposals regarding ways to improve the taxation system in Ukraine in the context of justice can be useful in forming the foundations of the state fiscal policy, as well as forming the perception of the Ukrainian tax system as fair by those to whom it applies.

Fermatean Fuzzy Group Decision-Making Based CODAS Approach for Taxation of Public Transit Investments

The provision of public goods is always a controversial issue in many aspects. Even some additional financial resources can provide public transit systems, the tax revenues constitute a significant part of the investments in practice. Yet, governments should make an important decision regarding tax schemes. This article focuses on how to identify the best tax scheme to finance public transit investments. A three-phase Fermatean fuzzy group decision-making approach is developed to solve the highlighted problem. Qualifications and experience of experts are considered to distinct their reputations. A Fermatean fuzzy direct rating method is introduced to evaluate criteria importance. A Fermatean fuzzy combinative distance-based assessment method is formulated to assess tax schemes. The study provides valuable policy implications and decision-making guidelines using a real-life case. The results show that beneficiaries of public services should pay more, and tax collectors are encouraged to use progressive tax schemes instead of the equal distribution of the cost to the taxpayers. The sensitivity analysis to changes in the threshold parameter is given. The comparative analysis with all state-of-the-art Fermatean fuzzy set based multicriteria decision-making methods is provided. The Fermatean fuzzy group decision-making approach is highly robust and reliable. The approach can solve other public transportation problems.

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”.

Bridging the socioeconomic gap in E-waste: Evidence from aggregate data across 27 European Union countries

The responsible handling of e-waste has become a critical worldwide concern since, as it is essential for both environmental protection and human health because. This is because it prevents the release of harmful chemicals and reduces the ecological impact associated with the electronic waste disposal. Despite efforts the e-waste collection remains low due to a variety of reasons, including inadequate collection systems and socio-economic disparities. The present study aims to investigate the socioeconomic determinants affecting the level of e-waste in a sample of 27 EU countries for the period 2005–2020. The empirical analysis contributes to the existing literature by estimating the short- and long-term relationship between e-waste collection and corruption, income inequalities, imperfect gas market structures and labor market conditions. For this purpose, the study employs panel data techniques and cointegration analysis. The findings robustly suggest that countries with higher levels of socio-economic justice tend to exhibit higher e-waste collection levels, while the concentration of market share among a few dominant natural gas companies decreases collection levels. Low e-waste collection is also associated with concentrated income in the hands of a few individuals in both the short-and long-run. By advocating for equitable resource allocation and establishing a supportive environment, we can encourage increased levels of e-waste collection. Encouraging gas market entries and discouraging anti-competitive practices through regulatory frameworks is also crucial. Strategies to reduce wealth disparities and promote income equality involve implementing progressive taxation systems, redistributive policies, and inclusive economic development initiatives.

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.
 
 
 
 
 
 
 
 

EFFECTIVE TAX SYSTEM AS A DRIVER OF INNOVATION PROCESSES: A COMPARATIVE STUDY OF FINLAND AND UKRAINE

This article explores the theoretical and methodological aspects of a country's tax system in terms of its impact on the development of innovation processes. It identifies the role of tax revenues in the economic and innovative development of a state, serving as a primary source of funding for sectors providing public services. The study emphasizes the role of tax policy in the development of a national innovation system, focusing on elements such as startups, venture business, incubators, accelerators, and technology parks within the current business ecosystem. The tax system is defined as a key element in the functioning of a state and the regulation of its economy, considering the needs of innovative structures to facilitate national development. Ukraine and Finland are chosen for the analysis of the impact of the tax system on innovation processes, representing Eastern and Northern Europe, respectively. The study analyzes proportional taxation in Ukraine, including the option of a simplified system, and progressive taxation in Finland, where tax rates increase with income growth. The research highlights significant differences in tax payment culture between the two countries. Finland exhibits a high level of tax culture, supported by the effective use of budgetary funds to create public goods. In contrast, Ukraine has a relatively low tax culture due to the population's low trust in the government and satisfaction with their social needs. The analysis of both countries' tax systems helps determine the role of tax policy in the innovative development of a state and the support of an innovative environment, including the implementation of startup projects.

Nexus between inflation, income inequality, and economic growth in Ethiopia.

The relationship between inflation, income inequality, and economic growth is a subject of intense debate among economic researchers and policymakers. This study aims to analyze this relationship in Ethiopia using advanced statistical techniques such as VEC (vector error correction) model with Granger causality, and Johansen's cointegrated. The study covers the period from 1980 to 2022 and includes pre and post-estimation diagnosis tests to ensure the accuracy of the model. The results indicate the presence of a long-run relationship among inflation, income inequality, and economic growth, as confirmed by Johansen's cointegrated test. Additionally, the vector error correction model shows a strong long-run relationship between economic growth, income inequality, and inflation. In the short run, there is a significant association between income inequality and economic growth, as well as between inflation and economic growth. The Granger causality test reveals a bidirectional causality between economic growth and income inequality and between economic growth and inflation. However, there is a unidirectional causality from inflation to income inequality. Based on these findings, it is suggested that the government should implement various strategies and policies, including redistribution policies, social safety nets, promoting inclusive economic growth, coordinating effective monetary and fiscal policies, implementing progressive taxation, and reforming the labor market.

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

ABSTRACT In this discussion of “The Inherent Conflict Between Progressive Tax Rates and Income Inequality: Lessons from COVID-19 Restrictions” (Goldman, Lusch, and Sadka 2022), I first provide context in which to better understand the article’s findings and contribution. I then discuss endogeneity and the generalizability of the article’s findings. I conclude with suggestions for future research. Data Availability: Data are available from the public sources cited in the text.

Revisiting taxes on high incomes

In this paper, we study income taxation in a model with entrepreneurial activity. We conduct two types of changes in tax policy: changing the overall progressivity of taxes versus changing the tax rate on the richest 1% of the population. Our results indicate that increasing the tax rate on the richest 1% of the population is more effective in raising revenues than increasing the overall progressivity of taxes as it leads to smaller declines in capital and output. We find that incorporating entrepreneurship in generating a reasonable wealth distribution leads to revenue-maximizing progressivity to be smaller than found previously.

Personal Income Tax Progressivity in the Czech Republic and its Influence on Tax Revenue

The article evaluates the influence of the tax progressivity of the personal income tax on tax revenue in the Czech Republic. The first part of the study deals with the analysis of tax progressivity. In the next part, the indicator of tax progressivity is used as a variable of the regression model examining its effect on tax revenue. The analysis is carried out for the period 1993-2020. For part of the period, the nominal tax rate was progressive, for part of the period, on the contrary, it was linear. This approach to solving the research topic is thus unique and creates added value to the text. This is due to the length of the examined period, the alternative approach to measuring tax progressivity, and the way the tax base from dependent activity was constructed in the Czech Republic for part of the period.

Poverty in Russia: Analysis, forecast, and overcoming

Subject. This article examines the phenomenon of poverty in the Russian economy. Objectives. The article aims to analyze the current poverty rate in Russia and substantiate recommendations for overcoming it. Methods. For the study, we used the methods of analysis and synthesis, analogy, generalization, a combination of the historical and the logical, and the economic and statistical ones. Results. The article reveals conceptual approaches to defining poverty and changes in the Russian methodology for determining the basic poverty line. Based on a comparative analysis of the global poverty rate in Russia and some countries of the world, the article presents a forecast of the poverty rate in the Russian economy for 2024–2026 and recommendations for overcoming poverty in the country. Conclusions and Relevance. The article concludes that not only a significant discrepancy between the absolute and relative poverty lines, but also an understatement of the official poverty line is characteristic of Russian practice. Progressive taxation and the establishment of a zero rate of personal income tax for citizens with incomes below the subsistence level can be one of the tools for reducing poverty. The results of the study can be used by the authorities and administration to develop State social policy.

Tax policy and aggregate stability in an overlapping generations model

AbstractIn the context of a two‐period non‐monetary overlapping generations model with Cobb–Douglas preference and technological specifications, this paper explores the theoretical as well as quantitative interrelations between equilibrium (in)determinacy versus (i) a progressive tax schedule on wage income and (ii) a balanced‐budget rule with endogenous labour taxation. In sharp contrast to previous studies on a one‐sector representative‐agent macroeconomy, we find that both fiscal formulations can possibly operate as stabilizing instruments against cyclical fluctuations driven by agents' self‐fulfilling beliefs. The key policy implication of our no‐indeterminacy result is that depending on what is the underlying analytical environment, countercyclical income taxation may stabilize or destabilize the business cycle.

An Old song in a New Way: About the Progression in the Personal Income Tax

The issues of choosing between proportional and progressive taxation of personal income and assessment of the principle of fair taxation in relation to these methods accompany the centuries-old history of world tax policy, which is the relevance of the research, being the subject of discussions of Russian and foreign scientists. The purpose of the study is to develop the idea of taxation of income of the population in Russia, taking into account the principle of fair taxation. The theoretical objectives of the study include an analysis of the validity of the method of taxation chosen, as well as an analysis of the progressive method of taxation, which allows for a fair redistribution of income through the progression of rates and an adequate system of tax deductions. The practical objectives of the study are to study the influence of income taxation methods on the formation of budget revenues and incomes of the population, to assess the “shadow” fiscal potential of income, to determine the level of demand and significance of tax deductions. As a result of the research, it has been scientifically proven that proportional taxation and weak progression discredit the principle of vertical equity, lead to a hidden progression in the withdrawal of income, have no obvious positive effect on capital outflow and, in combination with insurance premiums, affect the size of the potential tax base. The practical significance of the study is to develop concrete proposals for the methodological development of personal income tax through differentiated tax deductions, tax mechanisms for strengthening the institution of family and marriage, and the expansion of the tax base.

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.

Progressive income taxation and consumption baskets of rich and poor

In this paper, I analyze the implications of differences in consumption baskets across income groups to evaluate the effects of redistributive taxation on efficiency and inequality. To this end, I develop a static multi-sector general equilibrium model incorporating a parametric tax function, non-homothetic consumption preferences, and endogenous labor supply, with varying compositions of skilled and unskilled labor in production across sectors. A calibrated version of the model captures the cross-sectional differences in the compositions of households' consumption baskets in the United States. I find that considering the differences in consumption baskets between high- and low-income households leads to a lower optimal choice of income tax progressivity compared to the conventional approach that ignores this feature of the data.

Mandatory health insurance for the informal sector in Tanzania-has it worked anywhere!

Many countries in sub-Saharan Africa are struggling to expand voluntary health insurance schemes to raise finances toward achieving universal health coverage. With more than three-quarters of the population without any insurance, the government of Tanzania has unsuccessfully tried to pass a Bill proposing a mandatory, nationwide scheme to cover the large and diverse informal sector. The Bill proposed an annual premium of ∼150 USD for a household of six or 65 USD per person. Studies in Tanzania and Kenya have shown that the majority of people in the informal sector are unwilling and unable to pay premiums as low as 4 USD, mostly due to poverty. Mandatory health insurance for the informal sector is not common in this region, mostly because it is difficult to enforce. Successful insurance schemes have included significant subsidies from tax revenues. Tanzania should not seek to raise funds for health through an unenforceable insurance scheme but rather should consider a largely tax-funded scheme for the informal sector. Contributions through low-cost voluntary schemes can enhance social contracts, reduce out-of-pocket expenditure, and promote efficient utilization. In addition, progressive health taxes should be imposed on harmful products (tobacco, alcohol, sugary drinks, etc.) to raise more funds while addressing the increasing burden of non-communicable diseases. Furthermore, efficiency in the use of scarce health resources should be promoted through realistic prioritization of public services, the use of Health Technology Assessment, and strategic purchasing.

Recovering lost tax to meet the health financing gap for universal public sector health systems in East and Southern Africa

IntroductionUniversal healthcare services funded through taxation and free at point-of-access are the most equitable ways of funding healthcare rights. This paper examines key public sector health financing measures in 17...

Space Utilization Policy in Payakumbuh City to Support The Public Transportation

The strategy that might be applied to increase the use of public transportation is to apply space utilization incentives and disincentives. Incentives and disincentives for space use contain elements of regulation and control that are accommodating to various actual changes that occur in cities. The stages of this research are: : 1) distribution of questionnaires, 2) ranking of Alternative Incentives and Disincentives with Likert scale. The formulation of incentives and disincentives for space utilization that are predicted to increase the use of public transportation, Alternative incentives sequentially are: 1) Policy for subsidizing public transportation fares, 2) Policy for Rejuvenating Public Transport Fleet, 3) Improving infrastructure and supporting facilities for the use of public transportation, and for Disincentives: 1) Progressive Tax Implementation Policy on vehicle ownership, 2) Mandatory garage policy for prospective owners of private vehicles. The results of this study can be used as input for the Payakumbuh City government in making decisions related to spatial planning and transportation and further research needs to be done on alternative incentives and disincentives that have been formulated.

Determinants of Tax Evasion Attitude of Individuals: Evidence from a Country Facing Fiscal Turmoil

The purpose of this study is to investigate the determinants of tax evasion attitudes of individuals in Pakistan. Data is collected through survey questionnaires distributed to individual taxpayers in Lahore, Pakistan. For data collection, 300 hundred questionnaires were distributed to individual taxpayers through Tax Consultants, and a Google form quiz link was also shared on social media. A total of 267 responses with a response rate of 66.75% were found duly filled and fit for data analysis. Correlation and regression analysis were performed on the collected data in Smart PLS software to highlight the determinants of tax evasion. The results of the study revealed that the tax evasion attitude of individuals is significantly influenced by tax knowledge, tax rates, and the taxation system. By focusing on these factors, the government can control tax evasion by individuals which would cause an increase in its tax revenues. The findings of the study suggest policymakers should conduct tax awareness campaigns to increase the tax literacy of individuals, decrease tax rates, and replace progressive taxation with fixed tax rates. The efficiency of the taxation system should be increased by emphasizing the governance of tax administration.