Detailed Distributional Analysis (g10)

Distributional Analysis Questions

Q1: Pooled types

Looking at the results for income quintiles when the types are grouped together (the results with "all" for the type), is the tax progressive, proportional, or regressive? How can you tell? What is the difference in ETR between the lowest quintile and highest quintile? Note that it's fine to calculate that with a calculator: you don't need to build it into the script.

Q2: Pooled incomes

Now look at the results for types when all incomes are grouped together (the results with "all" for quint). Do the ETRs differ? If so, say a little about what you see.

Q3: Disaggregated results

Now look at the detailed results that are disaggregated by both type and quintile. Within any given type does the tax look progressive, proportional, or regressive? What is the difference between the ETRs of the highest and lowest quintiles for each group? As above, using a calculator is fine for this.

Q4: Conclusion

If an analyst failed to calculate the detailed results and looked only at the ETRs by overall quintile (question 1), would they overstate or understate the policy's progressivity or regressivity? Briefly explain. If possible, also explain why happens using the insights above.

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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 03/17/2021