Progressive Tax Research Articles

The fiscal reckoning of war: Contemporary armed conflict and progressive income taxation

Armed conflicts expose states to extraordinary fiscal stress and leave poverty and inequality in their wake. Yet, the fiscal policy responses in contemporary conflict-affected states appear feeble, in striking contrast to historical antecedents, having led to radical and distinctly progressive tax reforms. Whereas extant literature cautions against generalising Western wartime experiences, emphasising qualitative differences in warfare and institutional context, this article argues for the ex ante generality of the link between war and progressive taxation. Accordingly, it elaborates a revised theory of wartime tax bargaining, centred on fiscal need and demand for fiscal fairness, whereby contemporary conflicts, including civil wars, should induce governments to increase taxes, and particularly on the rich. The apparent absence of war-induced progressive taxation in the last decades, in contrast, is overdetermined by international shifts at the end of the Cold War and its influence on local wartime elites. Statistically analysing newly collected data on top personal income tax rates for all conflict-affected countries 1960–2020, it is shown that the link was strong, general and, contrary to common assumption, applied as much to civil as to interstate wars. The results support the theory, whereby acute revenue needs and war-induced demand for fiscal fairness translate into increased taxes on the rich. The sudden uniform disappearance of the association in the last decades, irrespective of country-level factors, is consistent with an interpretation emphasising global shifts precipitated by the end of the Cold War.

Lower support for redistribution and progressive taxes among young adults in Belgium

ABSTRACT Progressive taxes are an important policy tool to achieve redistribution within a society. While previous research has shown that there is broad popular support for progressive taxes, survey data from Belgium suggest that this support is significantly lower among younger age groups. Young respondents are significantly less willing to use tax policy as an instrument to reduce inequality, even when taking into account their concern about inequality. This age effect is significant, even controlling for political sophistication, income, beliefs in the welfare state, and ideology. Young adults therefore seem less willing to allocate a large proportion of societal resources to the political system in order to achieve redistribution, and in the concluding section we offer some suggestions on what might explain this phenomenon.

On progressive tax systems with heterogeneous preferences

On progressive tax systems with heterogeneous preferences

Proportionality–Progressivity of Biological Assets for Agricultural Prosperity

The aim of this research is to analyze the application of the principle of proportionality–progressivity to the tax rates established by local Mexican governments on biological assets, assessing their impact on the tax burden regression of small, medium, and large enterprises that carry out economic activities in agriculture. The Suits index was applied to measure the progressivity and regressivity of taxes applied to agribusinesses through a critical hermeneutic analysis of the tax burden by biological assets. The study concludes that most of the taxes on biological assets of the state tax system are progressive, and two of them are highly regressive. This study contributes to the understanding of state tax structures in agriculture, highlighting disparities across Mexico’s 32 state governments. The originality of the study provides the method to measure the progressivity-regressivity of taxes.

Taxing Dividends in a Dual Income Tax System: The Nordic Experience with the Income Splitting Rules

Abstract In a dual income tax (DIT) system, labor income is taxed progressively, while capital income is subject to a lower proportional tax. DIT systems were introduced in Sweden, Norway, and Finland in the early 1990s. In the absence of rules restricting capital income distributions, owners of closely held corporations would easily be able to circumvent the progressive tax on earned income by withdrawing an appropriate amount of dividends instead of wages. The Nordic countries adopted very different income splitting models, with immediate implications for the tax treatment of dividends. In this article, I first review the principles of the income splitting rules of Sweden, Norway, and Finland. I then discuss some of the trade-offs involved in the design of such rules.

Human Capital, Income Inequality, and Health: Analysing Heterogeneous Dynamics Across Income Groups

ABSTRACTThis paper examines the impact of human capital, gender inequality, and GDP on income inequality across seven regions with different income levels. Utilising panel data from 125 countries from 2000 to 2018, the study employs methods such as Panel Spatial Correlation Consistent dummy variables (PSCC) and panel quantile regression. The findings reveal that income level significantly influences the relationship between human capital and income inequality on GDP. Political stability and total population positively affect GDP in all income groups, whereas gender inequality negatively impacts GDP in high‐income countries but positively in low‐income countries. The study also investigates the correlation between the Gini coefficient and the Gender Inequality Index (GII). Results indicate a positive correlation between the lagged Gini coefficient and its current values, demonstrating the persistence of income inequality. The findings suggest that policymakers can reduce income inequality and promote economic growth through progressive taxation, social welfare programs, and labour market regulations. Policies targeting gender inequality can also influence income inequality and GDP. This research provides insights into the complex interplay between income inequality, gender inequality, and GDP, offering guidance for policymakers to design effective strategies for sustainable economic growth and inequality reduction.

Structural State Autonomy explaining development oriented policies in peripheral contexts: The Uruguayan case (2005–2015)

This article explores the challenge of building state autonomy as a driver of development processes in peripheral economies. More specifically, it explores how to build stable and lasting political processes in economies subject to high economic volatility and external dependence. To this end, I develop the concept of Structural State Autonomy understood as a relational and situated process, immersed in global asymmetries and a product of internal dynamics that shape conflict and cooperation among local actors. I take issue with this debate by analysing the progressive fiscal reforms in Uruguay during the 2000s by studying the Tax Reform aimed at improving income distribution and the New Investment Regime that modifies capital tax exemptions. The article shows that institutionalized, stable, and broad-based dialogues between the state and society have consolidated the Structural State Autonomy in Uruguay. In effect, granting partial benefits to different groups, through articulated and non-rival negotiated agreements that include local elites, grassroots actors, and transnational capital, has allowed the implementation of successful, albeit moderate, progressive tax reforms in Uruguay.

Designing Optimal Progressive Taxation with Hours Constraints

Designing Optimal Progressive Taxation with Hours Constraints

From Flat to Fair? The Effects of a Progressive Tax Reform

From Flat to Fair? The Effects of a Progressive Tax Reform

Tax policy and gender equality: the impact of the fiscal system on women and men

The author examines the impact of tax policy on gender equality, analyzing the differentiated impact of the fiscal system on women and men through the study of various tax instruments, such as direct and indirect taxes, family taxation mechanisms and the provision of tax benefits. The purpose of the study is to identify specific problems related to the unequal impact of tax instruments and to develop recommendations for improving the fiscal system that ensures equal economic opportunities for all citizens, regardless of gender. The subject of the study is the relationship between tax mechanisms (direct and indirect taxes, family taxation, tax benefits) and the economic status of women and men, as well as the identification of ways to improve the tax system taking into account gender factors. Research methods include economic analysis, comparative legal analysis, and statistical modeling. The author used both quantitative and qualitative methods, such as the analysis of tax statistics, the study of national and international legislation, the analysis of cases and international experience (Germany, France, USA, Canada, etc.), as well as the involvement of scientific publications and expert opinions. The results of the study show that despite the formal gender neutrality of tax legislation, its effects differ for women and men due to gender differences in income, employment, and the distribution of family responsibilities. Joint taxation of spouses, especially with a progressive tax scale, can reduce women's motivation to work due to the effect of the "second income tax". In turn, the separate taxation applied in a number of countries contributes to greater economic independence of women and stimulates their active participation in the economy. The article offers recommendations for improving the tax system, including the transition to separate taxation, the revision of tax benefits taking into account gender aspects, the conduct of a gender audit of the tax system and the introduction of gender-based budgeting. The author concludes that it is necessary to create a fair and efficient tax system that ensures equal opportunities for all citizens without providing unreasonable preferences to one gender.

Sugar-sweetened beverages: taxation evidence from seven European countries and recommendations for implementation in other EU regions.

Higher-than-recommended sugar consumption (< 10% of total energy intake; WHO) leads to negative health impacts and the development of serious diseases. Sugar-sweetened beverages (SSBs) proved to be among the leading sources of free sugar intake, as they contain large amounts of added sugar. Our article aims to propose tax measures that will help change consumer behaviour and reduce SSBs consumption. For a comparison of the forms of taxation, the experience of seven countries (Denmark, France, Hungary, Italy, Poland, Catalonia - Spain, and the UK) were analysed. The evolution of sugar consumption, consumption of sweetened drinks and obesity before and after the introduction and/or abolition of the sugar tax were reviewed. States that implemented a tax on SSBs were able to reduce SSBs consumption in the first year after the tax was introduced when states with a sugar-content-based tax have implemented it more effectively than states with a volume-based tax. Based on this finding, we propose basic design assumptions for the tax that can be used in European countries that have not yet introduced the tax. Progressive taxation divides beverages into 3 bands. The basic assumption is to encourage the desired consumer behaviour, i.e., consumption of SSBs with lower sugar content. The proposed tax design is applied to the conditions of the Czech Republic as a model case study. The results of our study suggest that SSBs taxation could be an effective policy intervention to improve population health by reducing the health impacts of SSBs among children and adolescents, although further studies are needed to prove the causality of the described associations.

DESENVOLVIMENTO HUMANO: UMA ANÁLISE FUNDAMENTADA EM KARL MARX, PIKETTY E LUDWIG VON MISES

This article examines the contemporary debate on income redistribution and economic freedom through the theoretical contributions of Thomas Piketty and Ludwig von Mises. The topic transcends academic boundaries, involving public discourse and fostering critical reflections essential for building democratic and equitable societies. The study aims to deepen the understanding of Piketty's proposals, particularly redistributive policies and progressive taxation, and analyze the practical challenges of their implementation. It also investigates Mises' praxeology, highlighting economic freedom as a cornerstone of human development. Adopting a qualitative and exploratory approach, the research is based on bibliographic sources and comparative analytical methods. The findings reveal that both authors agree on the critical role of economic development in promoting social equity, but their approaches diverge. Piketty emphasizes redistributive measures, such as progressive taxation, while Mises highlights the efficiency and cooperation fostered by free markets. The conclusion emphasizes the dynamic and ongoing relevance of this intellectual debate. The study demonstrates that integrating the perspectives of Piketty and Mises can guide the formulation of balanced public policies that promote both social justice and economic dynamism.

The Right to Equitable Access to Higher Education: An Analysis Based on the Philosophy of Pancasila

This research aims to comprehensively analyze citizens’ right to equitable access to higher education in Indonesia based on Pancasila’s philosophy. Employing a normative legal research methodology, this study examines the issue through statute and conceptual approaches. Data were analyzed using qualitative content analysis techniques to describe and address the research problem in depth. The findings indicate that equitable access to higher education is a constitutional right of every Indonesian citizen guaranteed by Pancasila and the 1945 Constitution. As an embodiment of the welfare state principle, the state is obliged to create a just, equitable, quality, and affordable higher education system for all levels of society. It requires affirmative regulations, innovative and equitable financing schemes, and a reliable quality assurance system. Higher education must be seen as a strategic instrument to break the cycle of structural poverty, enhance social mobility, and realize distributive justice by prioritizing the principle of social solidarity. Therefore, the projection towards free higher education, especially in state universities, is a strategic step that needs to be realized gradually and sustainably, supported by progressive tax system reform, increased allocation of education budgets, and optimization of alternative funding sources, as a form of progressive interpretation of Article 31 section (1) of the 1945 Constitution.

System Dynamics Modeling and Analysis of New Mexico Oil Production and Taxation

AbstractWe develop and use a system dynamics model of New Mexico Oil Production and Taxation (NMOPT) to explore the potential impact of exogenous and endogenous oil taxation on the level and stability of state revenue. Endogenous policies determine taxes based on internal dynamics (e.g., production value), whereas exogenous policies are independent of internal dynamics. We examine two exogenous and two endogenous (progressive and regressive) policies. Progressive taxation increases tax rates as production or price increases. Regressive taxation decreases tax rate as production or price increases. Our historical analysis indicates that New Mexico follows non-progressive (exogenous or regressive) taxation. However, our model’s Monte Carlo simulations reveal that transitioning to an exogenous fixed-rate taxation can substantially enhance the level and stability of the state’s revenues. The state can increase its revenue even further by adopting progressive taxation, which could also be considered an environmental policy, as it limits oil production. However, progressive taxation’s benefits come at the expense of higher revenue volatility. This paper also has two computational contributions: (1) a new intergenerational decline curve formulation to capture oil wells’ long-term productivity and (2) a detrended coefficient of variation to measure time series volatility in dynamic simulations reliably.

Regional and sectoral wage disparities as a reflection of inequality: The case of Kazakhstan

In today’s world, many countries, including Kazakhstan, are facing growing income inequality, poverty, and an increasing polarization of society. These challenges threaten social stability and make it difficult to achieve the Sustainable Development Goals. The purpose of this study is to investigate the size and trends of regional and sectoral wage disparities in Kazakhstan, as well as to create a typology based on the average wage levels in different regions and to provide recommendations for reducing income inequality. The study tested hypotheses about the relationship between the average nominal wage and the level of GRP, level of education, industry specialization, type of ownership, and size of enterprises. The methods of expert survey, correlation, and cluster analysis were used. The study revealed the tendency of increasing inequality of labor income. The largest differences between wages in extractive industries and agriculture were revealed in the Atyrau (11.5) and Mangystau (9.2) regions and Astana (7.2). Differences in average wages between regions were estimated at 1.7 to 7.8 times. The most significant factors affecting the level of average wages are gross regional product per capita and the share of gross value added of the quasi-public sector in the gross regional product. In order to reduce differences in wages, it is recommended to introduce progressive taxation, apply regional increasing coefficients, and calculate the minimum wage based on the hourly wage rate. AcknowledgmentThis work is supported by the Committee of Science Ministry of Science and Higher Education of the Republic of Kazakhstan (Grant BR21882165).

How to decline inequality: A taxation study on the luxury goods market

This article investigates the income and expenditure patterns of individuals, with a specific focus on investments in luxury items, real estate, and expensive modes of transportation. Using global databases such as “Luxury Goods—Worldwide/Statista Market Forecast” and “Data—WID—World Inequality Database”, the authors explore the correlation between high demand for luxury items and economic inequality. The study emphasizes the role of luxury tax as essential for implementing a progressive personal income tax system in Russia. By examining country-specific factors, particularly in China and Russia, and conducting a comparative analysis of progressive tax systems globally, the research highlights the potential of luxury tax to enhance the efficacy of income tax in reducing inequality.

O cashback tributário e a justiça fiscal no Brasil

The aim of this scientific article is to analyze the legal repercussions of the tax cashback introduced by Proposed Constitutional Amendment No. 45/2019, especially the suitability of the institute for implementing tax justice. The research was carried out using the hypothetical-deductive approach, with research into articles, books and economic and legal doctrine. Firstly, the concept of tax justice was analyzed. Subsequently, the relationship between tax justice and the negative income tax disseminated by Milton Friedman is demonstrated, as well as its relationship with the tax cashback institute. Next, the text of PEC 45/2019 is addressed, paying attention to how the tax cashback will be implemented, highlighting the benefits and also the difficulties in establishing the new system. Finally, it is recognized that the connection between tax justice, negative income tax and tax cashback lies in the effort to create a tax system that not only raises funds for the public coffers, but also actively seeks to reduce income inequality and improve the quality of life of the most vulnerable sections of society, increasing the progressivity of taxes in order to benefit the low-income population.

Inequality, social mobility and redistributive preferences

In an online experiment, we provide US citizens with information on both inequality of outcomes and opportunities and test the impact on preferences for redistribution. Information on wealth inequalities in the US increases consensus on a more progressive tax system, whereas information on lack of social mobility in the US increases participants’ preferences for redistribution via fiscal spending. Both informational treatments have a stronger impact when participants also learn that higher inequality is not a necessary part of economic development. All informational treatments have a stronger impact for citizens who underestimate the current level of inequality, trust the government, or belong to the middle-income group, while there is no clear relationship between political position and the impact of information on preferences for redistribution.

A new stage of personal income taxation in Russia

Subject. The article deals the latest changes in the Russian legislation regarding the taxation of personal income that is planned to be legally effective as of January 1, 2025. Objectives. The article aims to examine historical, theoretical, and practical foundations of personal income taxation to determine the feasibility of introducing a progressive scale. Methods. The study draws on methods of comparison, observation, and scientific abstraction. Results. We established that the indicators of budget revenues from the payment of personal income tax tended to increase both at progressive and flat tax rate. The performance of the payment under study is influenced by such factors as employment, income received by an individual, manufacturing sector expansion, and creation of new jobs. The findings can be applied in the work of executive authorities, budgetary, and other organizations, including the educational process of academic institutions. Conclusions. The transition to progressive scale of taxation can lead to undesirable consequences, since there is a high risk of hiding citizens' incomes. The order of differentiation of tax rates requires economic thinking. A system should be created to eliminate social inequality by taking into account the income level of individuals.

When is it Fair to Tax the Rich? The Importance of Pro-Social Behavior

Politicians, activists, and the rich themselves variously describe rich people as hard workers, greedy tax avoiders, generous philanthropists, and more. Occasionally, such descriptions are wielded in attempts to legitimize or delegitimize high income taxes on the rich. However, we do not have a good understanding of which of these appeals are most successful. This article explores which attributes of the rich affect support for progressive taxation. First, I use an inductive approach to derive relevant attributes from open-ended survey responses and prior literature. Then, pre-registered experiments in the United States and Denmark show that when the rich exhibit pro-social behaviors (e.g., treating workers well, not using tax loopholes), this reduces public support for taxing them. In comparison, indicators of merit (e.g., working hard) are of secondary or even insignificant importance. I conclude that in redistributive politics, the perceived pro-social behavior of the rich is a key consideration for the public.