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Degressive Tax – Definition

Degressive Tax Definition

Any tax where the rate of the tax decreases as the amount subject to taxation increase.

A Little More on What is a Degressive Tax

This kind of tax puts more burden on the poor and relieves the rich. The rate of tax is disproportionate to the ability of payment of taxpayers. It is a regressive tax system as, the more someone consumes or earns, the less pay they for it. The people with higher income and consumption pay less tax than the people with less income and consumption.

References for Degressive Taxation

Academic Research on Degressive Tax

The marginal cost of public funds, Browning, E. K. (1976). Journal of Political Economy84(2), 283-298. According to this paper, the marginal cost of the public fund is defined as the direct tax burden plan in addition to the marginal welfare cost produced in purchasing the tax revenue. Hence, an estimation which indicates that the marginal cost of the public fund for taxes on income (labour) in the United States extends from 1.09 to 1.16 per USD of the tax revenue which is subject to the progressivity of the change in the structure of the tax. This paper primarily explains the marginal cost of most public funds.

On public good provision with distortionary taxation, Wildasin, D. E. (1984). Economic Inquiry22(2), 227-243. According to this paper, an assumption which states that the “proof include a previous Cobb-Douglas example” was set as an example in this text. Although, for the single-consumer Ramsey tax model, the adoption of the distortionary taxation which provides public goods with finance is shown to reduce the optimal level of the public good provision below it ideal level in a first-best economy where lump-sum taxation is rampant.

Welfare costs per dollar of additional tax revenue in the United States, Stuart, C. (1984). The American Economic Review74(3), 352-362. According to this study, the welfare cost per dollar of the additional tax revenue levied on most United States firms was considered and the reason for these additional taxes was also discussed in the course of this study.

Tax incidence under oligopoly: a comparison of policy approaches, Hamilton, S. F. (1999). Journal of Public Economics71(2), 233-245. This study poses a practical approach as regards the analysis of the tax incidence that covers familiar kinds of taxation in a more generalized and analytically suitable model. Taking an oligopolistic firm as an example, the performance of a tax solely depends on the responsiveness of a unit tax rate to the changes in the firm’s output. For most revenue with neutral tax reforms, the assumptions of Delipalla and Keen (1992) that the “ad valorem” taxes welfare governs specific taxes under the oligopoly was established as a peculiar case according to this result.

The theory of progressive taxation, Seligman, E. R. (1893). Political Science Quarterly, 220-251. This paper explains the theory of progressive taxation and how this theory has in one way or the other influence the tax revenue.

The rhetoric of the anti-progressive income tax movement: A typical male reaction, Kornhauser, M. E. (1987). Michigan Law Review86(3), 465-523. In this paper, an argument against the supporting of individualistic philosophic premises as well as the progressivity behind the mask of rhetoric was cleared. This paper, however, shows that these theories do not only depend on the objective (scientific facts) but on a strong vision which includes the people and the society. According to this study, the vision is found out to be real but not the only one. Hence, another test was carried out on the individualistic beliefs which are basically the neoclassical economic perspective of efficiency and reveals the weaknesses in the argument thereby favouring the flat tax.

The marginal cost of public funds in closed and small open economies, Ruggeri, G. (1999). Fiscal Studies20(1), 41-60. This paper defines the efficiency cost of valuation and explained that it has become a very important factor to consider inasmuch as the valuation of the alternative tax policy option is to be considered. A review which shows the estimate of the cost efficiency of taxation was presented as well as some new estimates which cover the small open economies. This study also indicates that in a closed economy, the alterations from taxation are termed highest for corporate taxes and lowest for wage taxes. Also, this paper argues that personal income taxes are less misrepresented than wage taxes basically because the correlation between domestic investment and saving is served.

 

The marginal costs of taxation and regulation, Diewert, W. E., Lawrence, D. A., & Thompson, F. (1998). PUBLIC ADMINISTRATION AND PUBLIC POLICY67, 135-172. This paper explains the marginal cost of taxation and regulation as well as how these two factors influence the tax revenue of a firm or an economy.

The marginal cost of Australian income taxation, Findlay, C. C., & Jones, R. L. (1982). Economic Record58(3), 253-262. This paper made an amendment on the previous measure and estimate of the marginal cost in the Australian public funds. According to this measure, when the financing of expenditure program is economically related to the welfare cost, that cost should fundamentally be considered a part of the opportunity cost of the expenditure program. Hence, this paper studies some of the ideas of the welfare loss of taxing labour income by making use of an established measure of the cost of public funds. The cost of a policy option in the motor vehicle firm was also explored.

Ethics and Taxation: A Theoretical Framework, Green, R. M. (1984). The Journal of Religious Ethics, 146-161. This paper tackles the problem of taxation and asks important moral questions about fairness and justice. However, this problem has been said to be old, and a systemically ethical reflection as regards the taxation can be tracked to the last few centuries. This paper explains five basic values that have been hypothesized as bearings on tax policy and they include; distributive justice, freedom, health and welfare, material well-being as well as employment and equity. Also, a yardstick for approaching the main lecture on taxation of the historical religious traditions was also surveyed according to the aforementioned processes.

Private provision of public goods: incentives for donations, Pittel, K., & Rübbelke, D. T. (2006). Journal of Economic Studies33(6), 497-519. The main aim of this paper is to study the most frequently used policy procedure and use it to explain the private provision of public goods by allowing agents to minimize their income or corporate tax problems.

The semantics of the Flat Rate Tax and Tax Reform, Minarik, J. J. (1985). Cato J.5, 437. This paper explains the semantics of the flat rate tax and the rate reform. Also, the correlation between these two processes was also established in this paper.

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