Comparing Tax and Transfer Systems

This paper is concerned with comparisons between alternative tax and transfer systems. Using 'target efficiency' measures where the objective is the alleviation of poverty, means testing is preferred. However, the desire to reduce inequality usually leads to a preference for universal transfer systems such as the linear income tax. The present paper provides comparisons of social welfare (using an abbreviate welfare function) for schemes which imply the same degree of poverty (using several poverty measures). It was found that means-testing dominates if the headcount poverty measure is used, otherwise the linear tax dominates. Copyright 1996 by The London School of Economics and Political Science

Econometrics · Economic growth · Economics · Inequality · Measure (data warehouse) · Microeconomics · Political science · Poverty · Preference · Public economics · Social Welfare · Social welfare function · Welfare · Computer Science · Fiscal Policy and Economic Growth · Gender, Labor, and Family Dynamics · Income, Poverty, and Inequality · Mathematics

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