Ideas to Action:

Independent research for global prosperity

Working Papers

Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers - Working Paper 446

Ali Enami , Nora Lustig and Rodrigo Aranda
January 3, 2017
Download PDF
This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.

Related Topics:

Rights & Permissions

You may use and disseminate CGD’s publications under these conditions.