Measurement of Tax Progressivity: Application

Abstract

The S index of tax progressivity is used to classify a number of tax/financing alternatives and is applied to the issue of transit financing. Potential household-based funding sources can be compared using data from the 1972-1973 Consumer Expenditure Survey. Subject to certain qualifications, it was found that most funding sources were regressive, but with significant variation. The most regressive alternatives were household tax, cigarette tax, and transit fares; the least regressive were parking, income tax, and stock transfer taxes. The results can be used to compare the progressivity of one source vis-à-vis another or to choose a source to minimize negative distributional impacts.