Inequality of post-tax income among pre-tax equals is evaluated and aggregated to form a global index of horizontal inequity in the income tax. The vertical action of the tax is captured by its inequality effect on average between groups of pre-tax equals. Putting the two together, horizontal inequity measures loss of vertical performance. The identification problem, which has previously been thought insuperable, is addressed by a procedure validating the banding of income units into 'close equals' groups. The horizontal and vertical effects of a major Spanish income tax reform are evaluated. Lines for future investigation are suggested.
Authors
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Peter Lambert,
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Xavier Ramos
Working Paper details
- DOI
- 10.1920/wp.ifs.1995.9501
- Publisher
- IFS
Suggested citation
Lambert,, P and Ramos, X. (1995). Vertical redistribution and horizontal inequity. London: IFS. Available at: https://ifs.org.uk/publications/vertical-redistribution-and-horizontal-inequity (accessed: 4 July 2024).
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