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Economic Isolation, Inequality, and the Suits Index of Progressivity

Abstract

We present a class of social evaluation functions and inequality indices that obey standard axioms of welfare economics and that can be intuitively linked to measures of relative deprivation and economic isolation. From this, associated classes of indices of tax departure from proportionality and tax redistribution are derived. A special case of these indices is the popular Suits index of progressivity, for which no social welfare foundation has previously been provided. We illustrate the application of these indices using the British regime of personal income taxes and National Insurance contributions.Progressivity, redistribution, inequality, economic isolation.

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