Taxes and transfers redistribute income across OECD countries, lowering inequality. However, the equalizing effect varies widely. While redistribution has declined for almost all OECD countries since the mid-1990s, the decline was largely driven by reductions in transfers, particularly unemployment-related benefits. Reforms to personal income taxes had a smaller impact. Policy changes, including reductions in top income taxes and unemployment benefits, have contributed to falling redistribution, though some policies increased redistribution for working families.
This presentation gives an introduction to Taxation
What is a TAX?
Types of Taxes in India
Direct Tax
Sub categories of Direct Tax
Indirect Taxes
Benefits of Taxes
Advantages of Paying taxes
Penalty for not Paying taxes
All the three methods of national income accounting are explained with mathematical questions and answers. It is very helpful for the NCERT and SCERT plus two commerce and humanities students who have to learn these methods in the second chapter of macroeconomics.
Presentation by OECD Chief Economist, Laurence Boone, on Inclusive Growth at the farewell conference in honor of Governor Karnit Flug, The Van Leer Institute in Jerusalem, 4 November 2018
This presentation gives an introduction to Taxation
What is a TAX?
Types of Taxes in India
Direct Tax
Sub categories of Direct Tax
Indirect Taxes
Benefits of Taxes
Advantages of Paying taxes
Penalty for not Paying taxes
All the three methods of national income accounting are explained with mathematical questions and answers. It is very helpful for the NCERT and SCERT plus two commerce and humanities students who have to learn these methods in the second chapter of macroeconomics.
Presentation by OECD Chief Economist, Laurence Boone, on Inclusive Growth at the farewell conference in honor of Governor Karnit Flug, The Van Leer Institute in Jerusalem, 4 November 2018
Recent labour market developments and reforms in OECD countriesRockwool Fonden
Director for Employment, Labour and Social Affairs in OECD Stefano Scarpettas presentation at the ROCKWOOL Foundation conference "Øget beskæftigelse kalder på reformer, der virker" in February 2018.
The presentation was recorded and is available on the Youtube channel of the ROCKWOOL Foundation.
Fiscal space and the composition of public finances - Jean-Marc Fournier, OECDOECD Governance
This presentation was made by Jean-Marc Fournier, OECD, at the 9th Annual Meeting of the OECD network of Parliamentary Budget Officials and Independent Fiscal Institutions held in Edinburgh, Scotland, on 6-7 April 2017.
On 23 January, ESRI researcher Barra Roantree delivered this presentation at the Barrington lecture whilst receving the Statistical Society's Barrington prize.
A press release for the study can be found here:
https://www.esri.ie/news/irish-tax-system-does-most-in-europe-to-reduce-inequality
Presentation delivered by OECD Secretary-General Angel Gurría for the joint launch of the 2018 Environmental Performance Review and Economic Survey of the Czech Republic.
Restructuring public spending for efficiency - Jean-Marc FOURNIER, OECDOECD Governance
This presentation was made by Jean-Marc FOURNIER, OECD, at the 10th Annual Meeting of Middle-East and North Africa Senior Budget Officials (MENA-SBO) held in Doha, Qatar, on 6-7 December 2017
Longer-term forecastings - David Turner, Economics Department, OECDOECD Governance
This presentation was made by David Turner, Economics Department, OECD, at the 11th Meeting of OECD PBO & IFIs held in Lisbon, Portugal, on 4-5 February 2019
Tax policy and its economic and budgetary impacts - Luiz de Mello, OECDOECD Governance
This presentation was made Luiz de Mello, Economics Department, OECD, at the 11th Meeting of OECD PBO & IFIs held in Lisbon, Portugal, on 4-5 February 2019
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
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US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
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how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
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2. Taxes and transfers redistribute income from richer to
poorer households in all OECD countries, lowering inequality
-60
-40
-20
0
20
40
60
1 2 3 4 5 6 7 8 9 10
% of disposable
income
Decile
Transfers Personal income taxes incl. SSC Net transfers
OECD average, working-age population,2014 or latest available
year
Source: Causa and Hermansen (2017)
3. But the equalising effect of taxes and transfers
varies widely across the OECD
... even for similar levels of inequality before TT
e.g. inequality post-TT lower in Ireland than Greece,
lower in Norway than Japan despite similar pre-TT inequality
Working-age population, 2014 or latest available year
Source: Causa and Hermansen (2017)
0
5
10
15
20
25
30
35
40
45
50
10
15
20
25
30
35
40
45
50
55
60
CHL
KOR
CHE
JPN
NZL
USA
ISR
LVA
EST
CAN
GBR
AUS
ITA
OECD32
ISL
ESP
SWE
NLD
DEU
POL
SVK
NOR
PRT
GRC
CZE
FRA
LUX
AUT
DNK
BEL
SVN
FIN
IRL
MEX
TUR
HUN
PercentageGini coefficient
Inequality before taxes and transfers Inequality after taxes and transfers Redistribution (in %, right axis)
4. The approach for measuring redistribution
• How is redistribution defined and measured?
By comparing household income inequality (Gini
coefficients) before and after taxes and transfers:
𝑅𝐸 =
𝐺 𝑚𝑎𝑟𝑘𝑒𝑡 − 𝐺 𝑑𝑖𝑠𝑝𝑜𝑠𝑎𝑏𝑙𝑒
𝐺 𝑚𝑎𝑟𝑘𝑒𝑡
• Micro data allow for identifying/separating the respective
inequality-reducing effect of various fiscal instruments:
• Cash transfers
• Insurance (e.g. unemployment & sickness benefits)
• Assistance (e.g. social assistance, means-tested)
• Universal (e.g. family and child benefits)
• Personal income taxes and employee’s SSC
5. In all OECD countries cash transfers account for
the bulk of redistribution
Share of total redistribution,
working-age population, 2013 or latest available year
Source: Causa and Hermansen (2017)
6. Size of transfers matter, but countries also differ
in targeting to low-income households
Working-age population, 2014 or latest available year
Source: Causa and Hermansen (2017)
0
5
10
15
20
25
30
35
40
45
50
NZL
AUS
FIN
NLD
DNK
GBR
SWE
DEU
CHE
CAN
MEX
NOR
BEL
ISL
IRL
CZE
OECD
KOR
USA
ISR
SVN
EST
FRA
SVK
HUN
JPN
TUR
AUT
LVA
CHL
POL
LUX
ESP
PRT
ITA
GRC
Percentage
Share of total transfers to bottom quintile Total transfers in % of total market income
7. Redistribution has declined for almost all available
OECD countries since the mid-1990s…
Source: Causa and Hermansen (2017)
0
10
20
30
40
50
-20
-15
-10
-5
0
5
ISR
SWE
FIN
DNK
NZL
CAN
OECD16
USA
AUS
NLD
DEU
FRA
GBR
JPN
CZE
ITA
NOR
PercentagePercentage points
Change in redistribution Redistribution 2014 or latest year (right axis)
Working-age population, mid-1990s to 2014 or latest available year
8. The decline in redistribution was largely driven by
transfers, in particular insurance transfers
Source: Causa and Hermansen (2017)
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
FIN ISR SWE 1 DNK AUS NLD CAN CZE USA GBR FRA 2 NOR DEU OECD13
Percentage points
Transfers Personal income taxes incl. SSC Personal income taxes SSC Total
-10
-8
-6
-4
-2
0
2
4
6
8
FIN DNK AUS GBR CZE FRA 2 USA DEU OECD8
Percentage points
Insurance transfers Universal transfers Assistance transfers Total transfers
Working-age population, mid-1990s to 2013 or latest available year
A. Change in total redistribution
B. Change in transfer redistribution by type
9. Reforms to personal income taxes had a much smaller
impact
Source: Causa and Hermansen (2017)
Change in size and progressivity of PIT and SSCs paid by the working-age
population, mid-1990s to 2013 or latest available year
-10
-8
-6
-4
-2
0
2
4
6
8
ISR
AUS
GBR
FIN
CZE
DNK
SWE1
USA
CAN
FRA2
DEU
NOR
NLD
OECD13
Percentage
points
Size Progressivity Redistribution
10. • Redistribution has fallen across the OECD, but
why?
• What are the policy drivers of such decline?
• Can we disentangle those from changes in market
income inequality and population structure?
– e.g. more redistribution if higher unemployment, or
more workless families and dual-earner couples
• What are the influence of megatrends in particular
globalisation?
Why are tax-transfer systems doing less
redistribution?
11. The approach in a nutshell
Two complementary approaches to identify the policy
drivers of changes in redistribution:
1. Empirical regression analysis (Causa et al 2018):
relying on cross-country time-series analysis to identify
major policy drivers of RE among a broad set cyclical
and demographic drivers alongside structural changes;
covers the last two decades
2. Microsimulation analysis (Browne and
Immervoll, forthcoming): relying on
microsimulation analysis to decompose observed
changes in RE into specific TT policy changes at the
country level and “other” changes (i.e. in population
structure and market income inequality); covers a more
recent period
12. Main findings
• Microsimulation and regression-based analyses suggest that policy changes during
the past two decades have contributed markedly to the decline in redistribution:
A reduction in the taxation of top incomes and income from capital, as globalisation
has put pressure on governments to shift away from highly mobile tax bases.
This has reduced PIT progressivity in the upper-part of the distribution.
A decline in the generosity and duration of unemployment-related transfers,
including cuts to social assistance for the long-term unemployed.
Pension and early retirement reforms to encourage longer working life, for
instance increases in the age of full pension eligibility and reductions in replacement
rates.
• Not all policy changes went in the direction of reducing redistribution:
at lower earnings levels, income taxes have frequently become more redistributive
as taxes have been reduced for low-income working families.
13. Openness and tax redistribution
-4
-2
0
2
4
6
8
3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 4.6 4.8 5.0 5.2 5.4 5.6 5.8 6.0
Openness ratio (in log)
Change in redistribution (%) associated with a 1 percentage point increase in the PIT-to-GDP ratio
Increased economic integration has tended to reduce the redistributive effect of
tax revenue raised from PIT
Note: Regression analysis. This figure shows the estimated effect of the PIT-to-GDP ratio on redistribution as
a function of country’s level of trade openness. Dotted lines indicate confidence intervals.
Source: Causa et al (2018)
14. -40
-30
-20
-10
0
10
20
30
Unemployment benefits Social assistance Family benefits
Housing benefits Income tax Social security contributions
Note: Microsimulation analysis. This figure shows the change in benefit level as % of median income over a 24 month
unemployment spell. Weighted average over four family types, three different employment records and four different
previous earnings levels, each with and without entitlement to cash housing support.
Source: Browne and Immervoll, forthcoming.
Policy reforms reduced redistribution among workless
families
Change in average benefit level as % of median household income, 2001-15
15. But policy reforms increased redistribution among
(most) working families
Policy effect by percentile point of the earnings distribution
-3%
-2%
-1%
0%
1%
2%
3%
10 20 30 40 50 60 70 80 90
Gain/lossasapercentageofincome
Earnings percentile
2001-07 'Stimulus' period 'Austerity' period 'Post-austerity' period 2001-15
Note: Microsimulation analysis. The figure shows the unweighted average impact of policy reforms on net incomes
over 28 OECD countries. Within each country, policy impacts are calculated as a weighted average over 8 family types
(single with no children, single with 2 children, couple without children, couple with 2 children, each with and
without entitlement to cash housing support). Percentile points between the nine decile points are linearly
interpolated.
Source: Browne and Immervoll, forthcoming.
17. Illustrative tax reform scenarios
Increases in the top marginal rate on personal income and employees’ SSC
Increases in the net personal tax on dividend income
0.0
2.0
4.0
6.0
8.0
10.0
12.0
PRT
SVN
GRC
BEL
FIN
SWE
JPN
DNK
DEU
FRA
NOR
GBR
LUX
NLD
ESP
IRL
ISL
KOR
AUT
ISR
CAN
CHE
AUS
ITA
USA
CHL
POL
TUR
SVK
MEX
HUN
NZL
CZE
EST
LVA
%
Closing the gap with the OECD median
Closing the gap with the OECD upper-quartile
0
1
2
3
4
5
6
7
8
IRL
FRA
DNK
KOR
CAN
ISR
GBR
SWE
AUT
BEL
NLD
SVN
USA
FIN
PRT
AUS
ESP
NOR
DEU
CHL
ITA
CHE
JPN
ISL
LUX
POL
TUR
MEX
HUN
CZE
GRC
LVA
NZL
EST
SVK
%
Closing the gap with the OECD median
Closing the gap with the OECD upper-quartile
Reform-driven changes in redistribution for the working-
age population
Note & source: Estimated change
in redistribution from closing the
policy gap with the median or the
upper quartile of OECD countries,
depending on countries’ relative
starting point. The direction of the
policy change is chosen so that the
income redistribution effect is
positive.
Simulations based on regression
results in Causa et al (2018)
18. Illustrative transfer reform scenarios
Reform-driven changes in redistribution for the working-
age population
Increases in long-term unemployment-related transfers for low-income
married couples (including social assistance)
Increases in public spending on childcare and early education
0
2
4
6
8
10
12
14
16
IRL
CHE
NLD
FIN
LUX
JPN
ISL
NOR
SWE
DEU
FRA
AUT
LVA
SVK
NZL
ISR
AUS
CAN
CZE
GBR
SVN
POL
DNK
EST
BEL
ESP
PRT
KOR
HUN
USA
CHL
GRC
ITA
TUR
%
Closing the gap with the OECD median
Closing the gap with the OECD upper-quartile
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
ISL
SWE
DNK
FRA
NOR
FIN
NZL
HUN
KOR
DEU
ITA
SVN
ESP
IRL
BEL
AUT
ISR
LUX
GBR
CHL
SVK
CZE
POL
NLD
AUS
EST
PRT
JPN
USA
MEX
TUR
%
Closing the gap with the OECD median
Closing the gap with the OECD upper-quartile
Note & source: Estimated
change in redistribution from
closing the policy gap with the
median or the upper quartile of
OECD countries, depending on
countries’ relative starting
point. The direction of the
policy change is chosen so that
the income redistribution
effect is
positive.
Simulations based on
regression results in Causa et
al (2018)
19. Policy implications
• Given that income inequality has increased both before and after taxes and transfers, the
boost to job creation and employment from make-work-pay policies that have
lowered redistribution has not been sufficient to prevent a rise in inequality.
• Yet tax and transfer policies can do much to promote efficient markets and
inclusive outcomes. Countries can learn from successful reform strategies that have
leveraged policy synergies between equity and efficiency objectives. In particular, carefully
designed in-work taxes and benefits and credits can boost employment levels among target
groups and reduce inequality.
• Policy changes should ensure that redistribution is achieved in the most efficient
way and take into account the rapidly changing context in which policies operate.
Social protection reforms should seek to expand the coverage of unemployment benefits, not
least to address policy challenges raised by changes in the nature of work. Social assistance
reforms should seek to enhance the targeting of cash transfers to low-income households.
• A comprehensive strategy for tackling inequality should include policies
promoting greater equality of opportunities through access to high-quality education,
healthcare, affordable housing and lifelong training programmes.
20. References
2
0
• Causa, O. and M. Hermansen (2017), “Income redistribution through taxes and
transfers across OECD countries”, OECD Economics Department Working Papers,
No. 1453, OECD Publishing, Paris, http://dx.doi.org/10.1787/bc7569c6-en.
• Causa, O., A. Vindics and O. Akgun (2018), "An empirical investigation on the
drivers of income redistribution across OECD countries", OECD Economics
Department Working Papers, No. 1488, OECD Publishing
Paris, https://doi.org/10.1787/5cb47f33-en.
• Causa, O. , J. Browne, J. and A. Vindicis (2019), “Income redistribution across
OECD countries: main findings and policy implications”, OECD Economics
department Policy Papers No. 23
• Browne, J. and H. Immervoll ,“Have tax and transfer become less inclusive? Results
from a microsimulation analysis”, OECD Social, Employment and Migration
Working Papers, forthcoming.
Editor's Notes
Increased economic integration has tended to reduce the redistributive effect of tax revenues, and in particular of tax revenue raised from PIT and employees’ SSC.
In other words, increased economic integration has made a given level of fiscal deployment through the tax system less effective at reducing income inequality. This result is relevant as it is fully in line with recent research that has shown that: i) globalisation and international tax competition have put pressure on governments in OECD countries to shift taxation towards less mobile bases, and ii) this has been achieved mainly increasing the labour tax burden on the middle and upper-middle classes while reducing the burden on the top of the distribution – leading to a decline in the progressivity of PIT. By contrast with tax revenue, redistribution through social spending is not found to be affected by globalisation (column, 11), suggesting that the shaping of social policy is less directly influenced by the degree of exposure to external developments.
This figure shows the estimated marginal effect of PIT-to-GDP ratio on redistribution depending on countries’ openness. The figure points to strong non-linearities in the link between openness, PIT and redistribution:
For around half of OECD countries, the effect of the PIT-to-GDP ratio on redistribution is significantly positive but this effect declines with openness levels. For a country at the OECD average level of trade openness, a one percentage point increase in the PIT-to-GDP ratio is associated with a 2% increase in redistribution. For the countries for which such effect is statistically significant, it ranges from 3.7% (USA) to around 1.5% (Korea)
These findings are also largely in line with others who similarly to us show that the effect of tax on inequality is "eroded" with openness.
Overall, these results nuance the finding of a positive effect from globalisation on income redistribution and point to the potential challenge that increased economic integration poses for governments’ capacity and effectiveness to deliver income redistribution through personal income taxes.
In order to develop potential forward-looking policy reform avenues for OECD countries, empirical results are used to simulate the effect of selected tax and transfer reforms on income redistribution for the working-age population. The direction of the policy change is chosen so that the income redistribution effect is positive. In order to propose relatively realistic reform scenarios, avoid ‘one-size-fits all' solutions, but at the same time remain simple, the simulations consider two benchmark cases depending on countries’ relative starting point: 1) the median of OECD countries, with the policy gap being closed for countries below this benchmark, 2) the upper quartile of OECD countries, with the policy gap being closed for countries below this benchmark but above the median. This is a highly stylised way to consider cross-country heterogeneity along with political economy and implementation obstacles and concerns. The starting point is the latest available year for each policy indicator.
The following reform scenarios are considered in this presentation:
Tax reforms to increase the progressivity of personal income taxes, top marginal tax rates and the taxation of dividend income at the personal level would deliver large redistribution gains in countries that feature close to flat PIT systems, such as Eastern European countries as well as in New Zealand. This is because these countries feature relatively low levels of overall PIT progressivity, reflecting flat or close-to-flat PIT systems and consistently low taxation of top incomes and of dividend income at the personal level. While all countries feature positive top PIT marginal tax rates, some have null net dividend income taxation (Estonia and Slovak Republic) and others null PIT progressivity (Hungary). This implies that associated policy simulations correspond to “large” reform shocks which would likely be difficult to implement from a political economy perspective. High-tax countries such as the Nordics and most continental European countries are above or close to policy benchmark levels. So are some low-tax countries and in particular the United States, which reflects a relatively high level of PIT progressivity and (compared to most OECD countries) a larger role of taxes relative to transfers in inequality reduction.
All these tax reform simulations imply an increase in the progressivity of personal income taxes. This may raise efficiency concerns, for instance by reducing incentives to increase work effort, promote entrepreneurship and innovation, especially among high-earners. Yet the literature is not conclusive on the efficiency effects of changes in PIT progressivity. Such effects are fundamentally likely to depend on reform design and country context. Related to this consideration and going beyond, tax reform for inequality reduction should consider making the whole tax system more progressive and this implies looking at a variety of tax instruments beyond PIT. Such is the case of property taxation which is consensually less distortive than PIT and can in many OECD countries be made a more potent instrument of income redistribution than it currently is.
Transfer reform scenarios deliver larger effects than tax reform scenarios (in line with major finding that transfers achieve the bulk of RE across the OECD). The scenarios consistently point to major redistribution gains in countries where social spending on working-age population is relatively low and/ or weakly targeted to low-income households. Increases in long-term unemployed- related transfers to married couples delivers major redistribution gains where these transfers are null, i.e. Chile, Greece, Italy and Turkey, but also the United States where such transfers exists but are very low. The magnitude of these effects reflects the large implied size of the simulated reforms for these countries and should therefore be interpreted in light of alternative policy objectives alongside budgetary constraints.
Still, those same countries that exhibit comparatively low passive support for the long-term unemployed tend to also exhibit comparatively low active support. As a result, policy packages that would combine more generous cash transfers with more effective activation and training for jobseekers would likely meet equity and efficiency objectives. The United States and Turkey would also boost redistribution by increasing spending on early education and childcare; and so would Mexico and Japan. This would not only increase redistribution but also help narrowing gender gaps and curbing child poverty. Reforms to enhance access to quality childcare for disadvantaged families are likely to maximise policy synergies between efficiency and equity.