The relative revenue power of the marginal tax rates in personal income tax schedules: the Revenue Equivalent Marginal Rate Increase (REMI)

Using a sample of seventy-seven countries, this paper focuses on marginal tax rates and the income thresholds at which they apply to examine how the tax changes of the 1980s and 1990s have influenced economic growth, the distribution of income, and the share of taxes paid by various income groups. Many countries substantially reduced their highest marginal rates during the 1985-1995 period. The findings indicate that countries that reduced their highest marginal rates grew more rapidly than those that maintained high marginal rates. At the same time, the income distribution in several of the tax cutting countries became more unequal while there was little change or even a reduction in income inequality in most countries that maintained high marginal rates. Finally, the evidence suggests that there was a shift in the payment of the personal income tax away from those with low and middle incomes and toward those with the highest incomes.

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Optimal progressivity of personal income tax: a general equilibrium evaluation for Spain

SERIEs ◽

10.1007/s13209-020-00226-0 ◽

2020 ◽

Vol 11 (4) ◽

pp. 407-455 ◽

Cited By ~ 1

Author(s):

Darío Serrano-Puente

Keyword(s):

General Equilibrium ◽

Income Tax ◽

Optimal Level ◽

Personal Income ◽

Tax Rates ◽

Personal Income Tax ◽

Negative Effects ◽

Spanish Economy ◽

Current Scenario ◽

The Cost

AbstractIs the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.

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Personal Income Tax: Central government tax rates and thresholds (Edition 2018)

OECD Tax Statistics ◽

10.1787/a56c9c20-en ◽

2017 ◽

Keyword(s):

Income Tax ◽

Central Government ◽

Personal Income ◽

Tax Rates ◽

Personal Income Tax

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Measuring Revenue-maximizing Elasticities of Taxable Income

Public Finance Review ◽

10.1177/1091142115589970 ◽

2016 ◽

Vol 45 (2) ◽

pp. 174-204 ◽

Cited By ~ 2

Author(s):

John Creedy ◽

Norman Gemmell

Keyword(s):

Income Tax ◽

Tax Rates ◽

Marginal Rate ◽

Tax System ◽

Tax Rate ◽

Taxable Income ◽

Wide Range ◽

The Us ◽

Marginal Tax Rates ◽

The Right

This article considers the question of whether marginal tax rates (MTRs) in the US income tax system are on the “right” side of their respective Laffer curves. Previous attention has tended to focus specifically on the top MTR. Conceptual expressions for these “revenue-maximizing elasticities of taxable income” (ETI L), based on readily observable tax parameters, are presented for each tax rate in a multi-rate income tax system. Applying these to the US income tax, with its complex effective marginal rate structure, demonstrates that a wide range of revenue-maximizing ETI values can be expected within, and across, tax brackets and for all taxpayers in aggregate. For some significant groups of taxpayers, these revenue-maximizing ETIs appear to be within the range of empirically estimated elasticities.

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