Measuring Tax Progressivity: A Short Synthesis and Extension
摘要
In measuring tax progressivity, resort is mainly had to the indices associated with the names of Kakwani (1977) and Suits (1977) respectively. While both measures are plausible ones, it would help, in discriminating between the two, to have a handle on their respective properties and on the analytical connection between the two. The work of Formby, Seaks and Smith (1981) greatly facilitates such an understanding. Building further on this work, the present article emphasizes the view that a generalized measure of tax progressivity can be written as a weighted sum of income-specific gaps between cumulative income shares and cumulative tax shares. Whether a given gap is accorded more, less or the same weight as income increases could be taken to be a reflection of, respectively, ‘conservative’, ‘liberal’, or ‘neutral’ values regarding the progressivity of a tax system. This paper suggests that Kakwani’s measure is a neutral one, and Suits’ measure a conservative one; it extends these two indices to a third, liberal, measure, which is shown to be a weighted average of the Kakwani and Suits indices. These indices are shown to be special cases of an entire parametrized family of tax progressivity measures.