MEASURING TAX PROGRESSIVITY - COMPATIBLE GLOBAL AND LOCAL INDEXES

This paper analyzes two complementary measures of tar progressivity. R elative Share Adjustment (RSA) is the ratio of after-tax to before-tar shares of income for particular groups. RSA(g), a global measure, is the log of RSA averaged over all groups, weighted by group population. It is equal to the absolute change in inequality resulting from the t ar, as measured by Theil's index of income inequality. Values for the indexes are computed through application of alternative tax functions to simulated lognormal income distributions. The results highlight the contrasts in the distributional effects of different tar structures o f similar overall progressivity.