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THE COST OF INCOME REDISTRIBUTION IN AUSTRALIA
Author(s) -
CAMPBELL H.F.,
BOND K.A.
Publication year - 1997
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.1997.tb00844.x
Subject(s) - decile , adjusted gross income , economics , welfare , income distribution , demographic economics , gross income , distribution (mathematics) , labour economics , payment , poverty , income tax , public economics , inequality , state income tax , economic growth , statistics , tax reform , mathematics , finance , market economy , mathematical analysis
This paper analyses the effect of raising effective marginal tax rates on the income of the representative household in each gross income decile in Australia by one percentage point, and distributing the proceeds of the tax increase either in the form of an equal grant, or as an equal payment to members of households in the lower half of the income distribution. The effectiveness of the program in redistributing income is measured as the ratio of total gains in disposable income to households in target deciles to losses in non‐target groups, or as the proportional reduction in the poverty gap. The cost is measured as the ratio of the sum of the income‐equivalent of changes in the welfare of non‐target groups to those of target groups, or as the ratio of income‐equivalent losses to gains.