Resumen de Is an inequality-neutral flat tax reform really neutral?

Juan Prieto Rodríguez , Juan Gabriel Rodríguez Hernández, Rafael Salas del Mármol

• Let us assume a revenue- and inequality-neutral fiat tax reform shifting from a graduated-rate tax. Is this reform really neutral in terms of the income distribution? Traditionally, there has been a bias toward the inequality analysis, forgetting other relevant aspects of the income distribution. This kind of reforms implies a set of composite transfers, both progressive and regressive, even though inequality remains unchanged. This paper shows that polarization is a useful tool for characterizing this set of transfers caused by inequality-neutral tax reforms. A simulation exercise illustrates how polarization can be used to discriminate between two inequality-neutral tax alternatives.