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This book assembles nine papers on tax progressivity and its relationship to income inequality, written by leading public finance economists. The papers document the changes during the 1980s in progressivity at the federal, state, and local level in the US. One chapter investigates the extent to which the declining progressivity contributed to the well-documented increase in income inequality over the past two decades, while others investigate the economic impact and cost of progressive tax systems. Special attention is given to the behavioral response to taxation of high-income individuals, portfolio behavior, and the taxation of capital gains. The concluding set of essays addresses the contentious issue of what constitutes a 'fair' tax system, contrasting public attitudes towards alternative tax systems to economists' notions of fairness. Each essay is followed by remarks of a commentator plus a summary of the discussion among contributors.
List of contents
1. Introduction Joel Slemrod; 2. Trends in Federal tax progressivity, 1980-93 Richard Kasten, Frank Sammartino and Eric Toder; Comments William G. Gale; 3. The lifetime incidence of state and local taxes: measuring changes during the 1980s Gilbert Metcalf; Comments Robert P. Inman; 4. Trends in income inequality: the impact of, and implications for, tax policy Lynn A. Karoly; Comments David M. Cutler; 5. The efficiency cost of increased progressivity Robert K. Triest; Comments Gary Burtless; 6. On the high-income Laffer curve Joel Slemrod; Comments C. Eugene Steuerle; 7. Tax progressivity and household portfolios: descriptive evidence from the surveys of consumer finances John Karl Scholz; Comments Roger H. Gordon; 8. Progressivity of capital gains taxation with optimal portfolio selection Michael Haliassos and Andrew B. Lyon; Comments James M. Poterba; 9. Perceptions of fairness in the crucible of tax policy Steven M. Sheffrin; Comments Jane G. Gravelle; 10. Progressive taxation, equity and tax design Richard A. Musgrave; Index.
Summary
Should the rich bear the brunt of the tax burden, or should it be shared proportionately among the population? This issue has dominated public debates over the tax system, and is a controversial issue among economists. This book contains nine essays by economists on tax progressivity - how the tax burden is borne across income classes.
