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Considerations of fairness have no direct bearing on the issue of progressivity in tax rates; there is no genuine issue of vertical equity. Whether a proportional, progressive, or a regressive tax rate scheme is to be preferred on ethical grounds depends upon the justice of the outcomes the different schemes tend to promote. It is clear that this instrumental question requires a good deal of empirical information for its answer. While it is often claimed that high marginal tax rates greatly deter work (which is bad according to most theories of justice), this is not the consensus among economists.

Discusses tax policy and its relationship with social security. Sets out trends in taxation in the UK over the last 25 years, how these compare with those in other countries, and the relationship between the totals of tax and public spending. Describes Britain’s overall tax structure, the changing role of tax reliefs and what are now known as ‘tax credits’, and at how much tax people at different points in the income distribution pay. Looks at the changing interaction between tax and social security, at how the reforms of the last few years have affected incomes, and the implications of these changes for work incentives. The final section presents public attitudes towards taxation, in terms of its overall level, its links to particular spending items, and its progressivity – the evidence suggests some important differences between how people think the tax system works, how they think it ought to work, and how it actually does.

This chapter examines attitudes toward taxation, looking in particular at views about progressivity, taxing big business, and the estate tax. ANES surveys have regularly included some measures about taxation. The chapter finds that the new measures are correlated with the traditional questions (whether rich and poor pay too much or too little in taxes), but add new content as well. Attitudes about taxation are more strongly linked to ideology and values than to economic self-interest. In addition, the new items were more closely related to ideology and less so to what one would predict from assumptions about ordinary economic self-interest.

To provide transfers and services, governments must tax. In affluent countries the principal sources of government revenue are taxes on income (individual and corporate), payroll, and consumption. What is the optimal mix among these three types of taxes? The comparative empirical record suggests the following: Income taxes are the most progressive of the three. But taxation tends to have relatively little direct impact on the income distribution; transfers and services are far more important. Consumption and payroll taxes have not been the key to expansion of tax revenues in recent decades. The nations that have increased revenues (as a share of GDP) have done so as much via income taxes. Countries relying more heavily on income taxes have not suffered slower economic growth. Nations that rely more heavily on payroll taxes do appear to have had slower employment growth over the past few decades. For policy makers seeking an optimal tax mix, these findings suggest that countries have a good bit of leeway to choose.

This chapter presents the simulation results for five increasingly aggressive carbon tax regimes covering all greenhouse gas emissions. Major fiscal reform is viewed from a tax perspective involving capital tax reductions, labor tax reductions, their combination or lump-sum redistribution. The economy differs markedly across the four fiscal treatments but emissions reductions do not. Macroeconomic and industry impacts are described in detail. For the economy, the benefits of capital tax recycling outweigh the costs of carbon taxation; this reverses for the labor and lump-sum alternatives. Price-induced technical change is shown to be a net positive force for growth. Welfare effects are described demographically for individual households and in the aggregate. Social welfare is decomposed into efficiency and equity effects and is viewed from an egalitarian or utilitarian perspective. Labor tax reductions are welfare inferior despite their unqualified progressivity and are not necessarily superior to lump-sum redistribution at either the household or societal levels. Capital tax reductions, the book's titular double dividend, are welfare superior despite their qualified regressivity.

Rhythm is a structuring element of the narrative discourse of comics. Abstract comics can bring out the rhythmic and musical dimension intrinsic to the medium’s formal resources, and its rhythmic aspect may appear to be more immediately obvious than that of “classic” (figurative and narrative) comics. This chapter focuses on the rhythm of comics, first by considering the multiframe and the beat it emits. It shows that the beat is strongly dependent on page layout, that is, the arrangement of the panel frames. It illustrates the rhythm of comics with an example: Robert Crumb’s 1970 three-page story entitled Mr Natural’s 719th meditation. It also looks at the regular layout of Chester Brown’s graphic novel Louis Riel: A Comic-Strip Biography. Furthermore, the chapter examines three main ways of activating (and reinforcing) rhythm: repetition, periodic alternation, and progressivity. Finally, it presents specific examples of the accentuation of rhythm and the importance of rhythm in wordless comics.

This chapter employs the Panel Study of Income Dynamics to produce estimates of lifetime incomes for a large sample of individuals, and then calculates the present value of taxes and benefits for each person. The Social Security system takes taxes from both a high-wage person and a low-wage person during working years, and it provides benefits to both individuals when retired. It is noted that the choice of rate affects the absolute size of the present value gains or loss for each group, as well as the pattern of progressivity. In the model presented, the impacts of the Feldstein-Samwick plan are the opposite of the influences of the current Social Security system. The pattern of progressivity is impacted by alternative assumptions, but it is affected in similar ways for the current system and proposed reforms.

This chapter illustrates the link between progressivity and risk using a stylized framework based on simulations of earnings trajectories and portfolio returns. The model used in the analysis focuses on a cohort of workers who should expect to have their traditional benefits reduced at some point when the Social Security system is restored to solvency. Direct restrictions on equity holding in PRAs are likely to prove unpopular, particularly among those whose opportunities are most broadened by the chance to invest their mandatory contributions in equities. Extending the current framework to allow for optimal, age-dependent portfolio allocations and for saving in accounts other than the PRAs would provide better estimates of the extent to which greater progressivity can protect low earners from investment risk and of the size of the welfare costs paid by higher earners for providing this protection.

The income tax is the centerpiece of the federal tax system, as explored in this chapter, raising almost half of all federal revenues and making government policies more progressive. Despite – and in some cases because of – recent changes, the tax is ripe for reform. The proposed reforms would close loopholes, tax income more evenly across various uses, and provide the IRS with the resources to enforce the tax system better. This would raise new revenue, redistribute burdens more fairly, and simplify tax compliance.

This chapter examines a practice of “embedded self-correction” deployed to remove a possibly available inapposite hearing in such a way as to not “expose” a possibly delicate matter, nor delay the forward progress of interaction. In removing the incipient problem just before, or very shortly after, it becomes response ready, accountability for it is avoided. Three environments for embedded self-correction are described: (1) remediating a possibly untoward action regarding the interlocutor; (2) adjusting a problematic impression of self; and (3) removing something that sounds “silly” or is susceptible to an infelicitous or improper hearing. Speakers act rapidly to remove possibly available inapposite hearings by extending possibly complete turns (e.g., by adding increments), thereby avoiding exposing or becoming accountable for the problematic items, or delaying ongoing actions. Findings suggest that it may be possible to correct error without engaging the usual mechanisms of conversational repair.

This chapter discusses how economists measure the burden of a carbon tax—which households have less spending power because of the tax. It also discusses fairness in the tax code and how the revenue, which can be substantial, from a carbon tax can be returned to households and businesses in ways that enhance the fairness and efficiency of the overall tax system. A common belief is that a carbon tax is regressive—that it disproportionately burdens poor households. Studies discussed in this chapter refute this belief and argue that judicious use of the carbon tax revenue can make a carbon tax reform (tax and return of the revenue) even more progressive.

This chapter examines the implications of behavioral insights for tax design, taxpayers’ decision-making, and tax compliance. With regard to tax design, the chapter discusses policymakers’ own heuristics and biases, and their catering to (or exploitation of) the biased judgments of the public at large. Regarding economic decision-making, the chapter explores the dark and bright sides of tax saliency. With regard to compliance, it explains why people pay taxes, and how this compliance might be further enhanced. Finally, the chapter explains how cognitive factors affect taxpayers’ inclination to challenge tax liability. Additionally, the chapter describes the behavioral contribution to positive and normative analyses of redistribution, by shedding new light on how people form judgments about tax progressivity; the cognitive ramifications of poverty; wealth and subjective well-being; and the choice between methods and objects of redistribution. The chapter also comments on the use of taxes as a means of modifying human behavior.

The concept of efficiency is used in different ways in economics. First, the practical relevance of models that conclude that tax competition is either Pareto optimal or not is limited, because we do not live in the idealized circumstances of the Pareto frontier. Second, the more relevant criterion of Pareto improvement is silent on the prospect of regulating tax competition because, as previous chapters have shown, the latter has redistributive effects. Third, efficiency as an instrumental value to arbitrate trade-offs between two or more policy goals—a role it plays in optimal tax theory, for example—can in fact be used to show that regulating tax competition is a requirement of efficiency rather than an obstacle to it.

This chapter focuses on the utilitarian preoccupation with regulating inheritance tax proposals according to their incentive effects. The chapter begins by extending the discussion of John Stuart Mill. Special attention is then paid to Eugenio Rignano’s proposal to make inheritance tax ‘progressive over time’. The core idea of the Rignano scheme is to impose higher tax liabilities on inheritance that comes from prior inheritance or, in other words, to tax second-generation inheritance at a higher rate than first-generation. The main aim in the chapter is to identify the extent to which this proposal draws strength from the utilitarian commitments that motivated it, while also having some independent appeal. This distinction is articulated partly through evaluating some criticisms of the Rignano scheme that proved influential between the world wars, when the proposal enjoyed some prominence.

An important Progressive Era legal-economic debate concerned whether value, or welfare, was “individual” or “social.” The mathematics of marginalism worked only by assuming individual market choice. By contrast, evolutionary social science spoke of “instincts” that were not autonomous, but dictated by an evolutionary process in which successful survival characteristics were common across a species. For more than two decades economists, social scientists, and legal writers chose sides in this debate. Mainstream economists gradually adopted a “methodological individualism,” while social scientists moved toward a behaviorism that evaluated welfare socially instead of individually. This debate had profound implications on legal policy, particularly on taxation. Among the issues were the justifications for progressivity in income tax, the appropriate range of “public goods” that could be supplied by government, and the use of “Pigouvian” taxes to control socially harmful conduct.

This chapter discusses the application of human rights law to state tax policy, identifying normative principles by which UN human rights treaty supervisory bodies—like the Committee on Economic, Social and Cultural Rights—can assess whether a state’s tax laws and practices comply with its human rights obligations. In a human rights perspective, state tax policies can be improved in four directions: widening the tax base to finance public services, ensuring progressivity to reduce inequalities, plugging holes in the tax system, and strengthening participation and accountability around tax policy. The chapter then argues that the progressivity of a state’s fiscal policy depends on not only how tax revenues are raised but also how they are spent. It also provides an overview of recent literature on the impacts of tax policy on investment decisions, and traces recent international efforts to curb illicit financial flows.

The evolution of inequality in France is specific compared with most OECD countries. Inequality only started to rise at the end of the 1990s after a period of decline during the 1970s and the 1980s. This late increase partly explains the limited effects of inequality on social, political, and cultural outcomes. However, social gradients like income or education play a considerable role for fields such as health, housing, political participation, or trust in institutions. France is also particular with regard to the role of taxation. This chapter provides evidence about the absence of progressivity in the tax system. It concludes that the reforms implemented during the past decade have contributed to the increase in income inequality.

Few topics are more certain to generate a lively debate among any group of individuals than the causes and consequences of income inequality. Economists are prone to similar, although more reasoned and empirically based, debates. This book is a curated collection of essays that explores a wide range of viewpoints about income inequality in the United States. Neither income nor income inequality is easily measured, and, consequently, economists have different views about what is the best measure. Economists also offer differing explanations for the sources of income inequality and its ultimate consequences, leading to opposing policy implications. Finally, focusing on the United States adds yet another layer of complexity. Americans have unusually high incomes and unusually high income inequality.

This chapter reconsiders income methods of estimating of inequality using US tax data. It presents a new approach that accounts for the effects of important social changes, tax reforms, technical tax issues, and the 40 percent of income missing from tax returns. Results suggest much smaller increases in top 1 percent shares of pre-tax income. After accounting for taxes and transfers, top 1 percent shares changed little since 1962. This resulted from substantial increases in transfers and increased overall progressivity of the tax system. While effective tax rates for the top 1 percent show little trend, they declined for the bottom 50 percent. Rather than stagnating, per capita real incomes of the bottom half of the population increased over time. Rather than increasing and capturing most economic growth, incomes of those starting at the top decreased while those starting with low incomes received most of the growth.