TY  - JOUR
AU  - Slemrod,Joel
AU  - Bakija,Jon
TI  - Does Growing Inequality Reduce Tax Progressivity? Should It?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7576
PY  - 2000
Y2  - March 2000
UR  - http://www.nber.org/papers/w7576
L1  - http://www.nber.org/papers/w7576.pdf
N1  - Author contact info:
Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu

Jon M. Bakija
Department of Economics
Williams College
24 Hopkins Hall Dr.
Williamstown, MA 01267
Tel: 413/597-2325
Fax: 413/597-4045
E-Mail: jbakija@williams.edu
AB  - This paper explores the links between two phenomena of the past two decades: striking increase in the inequality of pre-tax incomes, and the failure of tax-and-transfer progressivity to increase.  We emphasize the causal links going from inequality to progressivity, noting that optimal taxation theory predicts that growing inequality should increase progressivity.  We discuss public choice alternatives to the optimal progressivity framework.  The paper also addresses the opposite causal direction: that it is changes in taxation that have caused an apparent increase in inequality.  Finally, we discuss the non-event-study' offered by the large changes in the distribution of income--with no major tax changes-- since 1995, and discuss its implications for the link between progressivity and inequality.
ER  -