Abstract
This paper suggests a simple method for analyzing the distributional effects of marginal changes in commodity taxes. The distributional effect of a tax is measured by its impact on the Gini coefficient of the overall distribution of real income. Then the Gini coefficient is decomposed in a manner resembling the decomposition of the coefficient of variation. This decomposition yield non-parametric estimates of income elasticities of the Engel curves. The magnitudes of these elasticities determine the desired change in taxes. The method is illustrated with data from Israel.
I thank Thesia Garner, Peter Lambert, Joram Mayshar, Joel Slemrod, Gerardo Sicat and Wayne Thirsk for helpful comments on earlier drafts.
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© 1994 Springer-Verlag Berlin · Heidelberg
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Yitzhaki, S. (1994). On The Progressivity of Commodity Taxation. In: Eichhorn, W. (eds) Models and Measurement of Welfare and Inequality. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-79037-9_25
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DOI: https://doi.org/10.1007/978-3-642-79037-9_25
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