Is it better to have a national income tax or a set of income taxes, different in the different regions? In this article, the authors conduct marginal analysis to determine dominance conditions on the configuration of income distributions in the regions under which small and related new regional taxes are superior to an across-the-board alternative without regard to domicile. Three cases, of lump-sum, proportional, and progressive taxes, are considered. An illustrative application to Spain confirms that the dominance tests can be successful and yields findings that may be of interest in their own right.
Get full access to this article
View all access options for this article.
References
1.
Atkinson, A. B., and F. Bourguignon. 1987. Income distribution and differences in needs. In Arrow and the foundations of the theory of economic policy, edited by G.R. Feiwel. London: Macmillan.
2.
Boadway, R. and F. Flatters. 1982. Equalization in a federal state. Ottawa: Economic Council of Canada.
3.
Castells, A. 1988. Hacienda Autonómica: Una Perspectiva de Federalismo Fiscal. Barcelona: Ed. Ariel.
4.
Cubel, M., and P. J. Lambert. 1999. Horizontal inequity can be a good thing. Revista Asturiana de Economia15:57-63.
5.
Dardanoni, V., and P. J. Lambert. 1988. Welfare rankings of income distributions: A role for the variance and some insights for tax reform. Social Choice and Welfare5:1-17.
6.
Lambert, P. J.1992. Rich-to-poor income transfers reduce inequality: A generalization. Research on Economic Inequality2:181-190.
7.
ŒŒŒ.2001. The distribution and redistribution of income: Third edition. Manchester, UK: Manchester University Press.
8.
Monasterio, C., F. Perez, J. V. Sevilla, and J. Sole. 1995. Informe sobre el actual sistema de financiación autonómica y sus problemas. Madrid: Instituto de Estudios Fiscales.
9.
Monasterio, C., and J. Suárez. 1998. Manual de Hacienda Autonómica y Local. Barcelona: Ed. Ariel.
10.
Pfáhler, W.1984. “Linear” income tax cuts: Distributional effects, social preferences and revenue elasticities. Journal of Public Economics24:381-388.
11.
Shorrocks, A. F.1983. Ranking income distributions. Economica50:1-17.
12.
Thistle, P. D.1989. Ranking distributions with generalized Lorenz curves. Southern Economic Journal56:1-12.
