Making Tax Policy: A Variance Ratio Approach to Measuring Tax Incidence

Whicker, Marcia L., de Lancer Julnes, Patria, Williams, Daniel W., Journal of Public Budgeting, Accounting & Financial Management

ABSTRACT. This paper briefly examines previous Lorenz Curve approaches to measuring tax incidence, including the Gini coefficient approach, and Suits's S measurement of tax effects. Both approaches have advantages, but are found lacking in providing useful simple information to policy makers and citizens, especially when comparing proposed but not yet implemented taxes or tax changes. A variance ratio measure, TIC, is suggested to evaluate proposed tax policy changes. This measure uses income data and tax rates to compare the variance for relative tax shares to the variance for income shares. In several examples, TIC performs as expected.

INTRODUCTION

The two chief …

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Publication information: Article title: Making Tax Policy: A Variance Ratio Approach to Measuring Tax Incidence. Contributors: Whicker, Marcia L. - Author, de Lancer Julnes, Patria - Author, Williams, Daniel W. - Author. Journal title: Journal of Public Budgeting, Accounting & Financial Management. Volume: 13. Issue: 1 Publication date: Spring 2001. Page number: 83+. © PrAcademics Press, Florida Atlantic University Spring 2007. Provided by ProQuest LLC. All Rights Reserved.

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