The Choice of Income Tax Progression

Abstract

This article examines income tax progression as a mechanism for achieving the intertemporal adjustments of earnings profiles. With a rising income profile, the preference for progression arises from the market (borrowing) rate of interest exceeding the rate at which the government borrows. For a given tax burden, each individual is found to prefer a marginal tax rate of unity, with the threshold set as high as possible. With a common tax structure, the conditions under which all individuals prefer progression is examined.

Citation

Creedy, J. (1990), "The Choice of Income Tax Progression", Journal of Economic Studies, Vol. 17 No. 6. https://doi.org/10.1108/EUM0000000000145