The Redistributive Effect of Direct Taxes: A Comparison of Six LIS Countries

Abstract

The Luxembourg Income Study (LIS) is used to investigate the redistributive effects of direct taxes in six countries, Australia, Canada, Sweden, West Germany, the United States and the United Kingdom. Two periods are considered and comparisons are made among countries at different points in time and within countries across time. Lorenz curves are adapted and used to make ordinal comparisons of two very general measures of tax progressivity- so called “residual” and “liability” progression. Newly developed statistical inference procedures allow us to take the sampling variability inherent in the LIS data into account.