| This research provides a new additive decomposition of federal income tax progressivity that traces the sources of progression to major provisions of the income tax law. A second decomposition that gives insight into the effects of negative incomes on inequality and tax progressivity is also provided. Microdata from individual income tax returns are used to make empirical estimates of progressivity and its decomposition across time. Particular attention is focused on the Tax Reform Act of 1986. Recently developed statistical inference procedures are applied to test whether observed changes are in fact significant and not due simply to sampling errors. |
