Sociology Index

PROGRESSIVE TAXATION

Regressive Taxation, Flat Tax, Proportional Taxation

Progressive taxation structure progressively increases the percentage of a citizen's income which is paid in tax as income increases. In progressive taxation the consequence should be that the more well off are taxed at a higher rate than are the less well off.

Progressive taxation takes into account the ability to pay. Progressive taxes reduces the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay. In progressive taxation people with more disposable income pay a higher percentage of their income in tax than do those with less income.

Regressive tax is the opposite of a progressive tax. In regressive tax the tax rate decreases as the amount subject to taxation increases.

High levels progressive taxes could encourage emigration since taxes are not internationally harmonized. High earners relocate in order to pay less tax, or find tax havens for their income.

The Conservative Case for Progressive Taxation - MARK HOOSE, Southwestern University School of Law, New England Law Review, Vol. 40, p. 69, 2005 
Abstract: This article explores whether conservatives, in particular classical or institutional conservatives, should support the radical tax reform currently being promoted by various elements of the Republican party, or should instead support continuation of progressive income taxation. The article looks first at the different types of conservative thought prevalent today, and then briefly reviews both the current progressive income tax system and the various, mostly consumption-tax based, reform proposals. The article then compares the current system and the proposed consumption-based reforms based on the main tenents of classical conservative thought as set forth by Russell Kirk. The article then argues that the progressive income tax is consistent with natural law; that it does not in practice promote a narrowing uniformity or a classeless society (and in fact does promote social peace); and that it does not destroy private property to any significantly greater extent than any other form of taxation.

Why Happiness?: A Commentary on Griffith's Progressive Taxation and Happiness 
DIANE M. RING, Boston College - Boston College Law Review, Vol. 45, No. 5, 2004 
Abstract: This Commentary examines three issues raised in Professor Thomas G. Griffith's Article on the connection between progressive taxation and subjective well-being, focusing on the selection of happiness as the measure of the gains of redistribution, the ability to measure happiness or subjective well-being, and the implications of using happiness in determining tax policy. After arguing that the progressive taxation debate would benefit from further exploration of why happiness is the appropriate measure of success, this Commentary raises concerns about relying on self-reporting of subjective well-being and how happiness studies should be interpreted and can be improved. This Commentary notes that studies of income and happiness may inform tax policy design by helping to determine the appropriate balance between taxes and expenditures, outlining a role for the government in informing taxpayer's perceptions of happiness, and focusing additional research necessary for an effective progressive taxation policy.

Progressive taxation and wage setting when unions strategically interact 
Giorgio Brunello, Department of Economics, University of Padova
Daniela Sonedda, University of Piemonte Orientale 
Abstract In a multisector economy with unionized labor markets, the interdependence of union wage claims—typical of industrial bargaining—affects the relationship between tax progressivity and wage pressure, which varies in a nonlinear fashion with the nature of the wage bargain, and can be hump-shaped.

Attitudes towards Tax Reform and Progressive Taxation: Sweden 1991-96 
Jonas Edlund, Department of Sociology, Umea University, Sweden 
One of the most debated elements of the Social Democratic reform of the Swedish tax system was the lowered income tax rate, which mainly affected the upper tax brackets. An analysis of public attitudes to the tax reform during three time periods reveals that attitudinal patterns are characterized by stability, both on aggregate and individual levels, and by profound social divisions. Support is more prevalent among more affluent social strata and those affiliated with Bourgeoisie parties compared to workers, low- income earners and those with left-wing preferences. Following attitudinal developments in the aftermath of the tax reform, social conflicts - mainly structured along class dimensions - as well as demands for tax progression tended to increase between 1991 and 1996.

Progressive Taxation, Moral Hazard, and Entrepreneurship 
Christian Keuschnigg and S�ren Bo Nielsen
Abstract: This paper considers the general equilibrium and welfare effects of a linear progressive income tax with entrepreneurship and moral hazard. A competitive intermediation sector diversifies risk associated with entrepreneurial activity, but full risk consolidation is prevented by moral hazard. Since effort is not observable, risk bearing of entrepreneurs is required for incentive reasons. We find that a nonredistributive tax is neutral. A progressive tax always impairs entrepreneurship while the effect on welfare can be positive or zero, depending on the specification of moral hazard.

Productivity Gains From Progressive Taxation of Labor Earnings - Iourii Manovskii
Abstract. I show that, in the absence of complete insurance markets, progressive taxation of labor income may provide productivity and welfare gains as compared to a revenue-equivalent proportional tax. In order to increase income in the future, individuals have to forgo income today by accepting lower wages while accumulating human capital or when destroying specific human capital in order to build it elsewhere. I first show analytically that a progressive tax system encourages people to make these temporary sacrifices despite the increased tax burden when wages are high.