{"id":1221,"date":"2025-10-02T04:04:16","date_gmt":"2025-10-02T04:04:16","guid":{"rendered":"https:\/\/www.thebrokeronline.eu\/progressive-policies-and-the-palma\/"},"modified":"2025-10-02T04:04:16","modified_gmt":"2025-10-02T04:04:16","slug":"progressive-policies-and-the-palma","status":"publish","type":"page","link":"https:\/\/www.thebrokeronline.eu\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/","title":{"rendered":"Progressive Policies And The Palma"},"content":{"rendered":"<section class=\"content column wide left blog_post content view\" id=\"content\">\n<div class=\"edit image\">\n\t\t<img decoding=\"async\" src=\"https:\/\/www.thebrokeronline.eu\/files\/var\/broker\/storage\/images\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/458050-1-eng-gb\/progressive-policies-and-the-palma_full_view.jpg\" alt=\"Chris JL \/ London\">\n\t<\/div>\n<article class=\"fader\">\n<header class=\"contents\">\n<div class=\"share\">\n\t\t\t<script type=\"text\/javascript\">\n    var addthis_config = {\n        ui_language = 'en'\n    }\n<\/script><\/p>\n<div class=\"addthis sharing\">\n\t<!-- AddThis Button BEGIN --><\/p>\n<div class=\"addthis_toolbox addthis_default_style addthis_32x32_style\" addthis:title=\"Progressive policies and the Palma\">\n\t<a class=\"addthis_button_twitter\" tw:via=\"thebrokeronline\"><\/a><br \/>\n\t<a class=\"addthis_button_facebook\"><\/a><br \/>\n\t<a class=\"addthis_button_pinterest_share\"><\/a><br \/>\n\t<a class=\"addthis_button_preferred_4\"><\/a><br \/>\n\t<a class=\"addthis_button_compact\"><\/a><br \/>\n\t<a class=\"addthis_counter addthis_bubble_style\"><\/a>\n\t<\/div>\n<p>\t<script type=\"text\/javascript\">var addthis_config = data_track_addressbar;<\/script><br \/>\n\t<script type=\"text\/javascript\" src=\"https:\/\/www.thebrokeronline.eu\/files\/js\/300\/addthis_widget.js\"><\/script><br \/>\n\t<!-- AddThis Button END -->\n<\/div>\n<div class=\"addthis article_options\">\n\t\t<!-- \n\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.thebrokeronline.eu\/mandrill\/subscription\/add\/48256\/51117\">Subscribe<\/a>\n\t\t\t\t -->\n    \t\t\t\t<\/div>\n<\/p><\/div>\n<h1>\n\t\t\t\t\t\t\tProgressive policies and the Palma<br \/>\n\t\t\t\t\t<\/h1>\n<div class=\"clear\"><\/div>\n<div class=\"pubDate\">\n\t\t<a href=\"https:\/\/www.thebrokeronline.eu\/experts-and-authors\/cobham-alex\/\">Alex Cobham<\/a>, <a href=\"https:\/\/www.thebrokeronline.eu\/experts-and-authors\/sumner-andy\/\">Andy Sumner<\/a>\t\t|<br \/>\n\t\t\t\t\t\t\t27 May 2025\n\t\t\t\t\t\t<\/div>\n<\/header>\n<div class=\"body contents\">\n\t<!-- body --><\/p>\n<p class=\"yunu3cvqabft7vifv\"><b><\/p>\n<p class=\"yunu3cvqabft7vifv\">The failure of effective direct taxation is the central explanation for much higher final income inequality. Therefore Cobham and Sumner argue in favour of more fairness in tax systems through metrics.<\/p>\n<p>\t\t<\/b><\/p>\n<p class=\"yunu3cvqabft7vifv\">\n<p class=\"yunu3cvqabft7vifv\">Debate on the role of inequality in the post-2015 framework has moved rapidly from \u2018whether\u2019 to \u2018how\u2019: how best to ensure that a range of inequalities are addressed. An important element of this is the inclusive economy agenda, from which two sets of questions emerge: the first on issues of policy (both redistributive and predistributive), and the second (which we\u2019ll address in a later blog) on issues of appropriate measurement.<\/p>\n<p class=\"yunu3cvqabft7vifv\">The UN consultation on inequality within the post-2015 framework has delivered a strong message in<a href=\"http:\/\/www.worldwewant2015.org\/node\/299198\" target=\"_blank\">&nbsp;its first report<\/a>, that inequality is bad not just for those at the wrong end of the distribution but for whole societies \u2013 resulting in a range of development damage from violent conflict to shorter periods of economic growth. The latter finding, supported by IMF researchers&nbsp;Ostry and Berg (2011), builds on a longer history of research showing that the pursuit of economic growth alone will not only fail to deliver human development but will be&nbsp;self-defeating even on its own terms. Research to which we have contributed supports the case for the importance of tackling inequality<a href=\"https:\/\/www.thebrokeronline.eu\/files\/aboutkings\/worldwide\/initiatives\/global\/intdev\/people\/sumner\/edward-sumner-version04march2013.pdf\" target=\"_blank\">&nbsp;to reduce income poverty<\/a> and to<a href=\"https:\/\/www.thebrokeronline.eu\/files\/aboutkings\/worldwide\/initiatives\/global\/intdev\/people\/sumner\/cobham-sumner-15march2013.pdf\" target=\"_blank\">&nbsp;accelerate Millennium Development Goal progress<\/a> more broadly; as well as making the case for the<a href=\"https:\/\/www.thebrokeronline.eu\/files\/sites\/default\/files\/images\/born_equal.pdf\" target=\"_blank\">&nbsp;inherent importance of inequality<\/a> as a (negative) component of human development.<\/p>\n<p class=\"yunu3cvqabft7vifv\">The role of inequality goes much wider than the economic components of development, but the \u2018inclusive economy\u2019 agenda is not as narrow as it can sound. It is worth noting the important work of the Asian Development Bank here, both in stimulating analytical debate around \u2018inclusive growth\u2019 (see e.g. important contributions from<a href=\"https:\/\/www.thebrokeronline.eu\/files\/sites\/default\/files\/pub\/2010\/adb-wp12-measuring-inclusive-growth.pdf\" target=\"_blank\">&nbsp;Stephan Klasen<\/a>,<a href=\"https:\/\/www.thebrokeronline.eu\/files\/papers\/adbcompendiuminclusivedevelopment.pdf\" target=\"_blank\">&nbsp;Ravi Kanbur<\/a> and<a href=\"https:\/\/www.thebrokeronline.eu\/files\/sites\/default\/files\/pub\/2010\/adb-wp14-inclusive-growth-criteria.pdf\" target=\"_blank\">&nbsp;Terry McKinley<\/a>) and in exploring the resulting policy agenda. As Klasen notes, however, \u2018inclusive growth\u2019 requires growth: \u201cthere is, by implication, no such as an \u2018inclusive contraction\u2019.\u201d<\/p>\n<p class=\"yunu3cvqabft7vifv\">\u2018Inclusive economy\u2019, as a framing, implies a necessarily greater emphasis on sustainability. The most obvious indicator is the distribution of final incomes; but this is the result not only of late stage interventions to redistribute market incomes, but also (and perhaps more importantly) of policies that underpin the distribution of those market incomes. These include, in turn, not only the more immediate such as labour market policies, but also the more distant \u2013 but crucial \u2013 such as policies that influence access to and the distribution of education, health and nutrition from birth. Questions of sustainability arise in relation both to the stability of any gains made, but also around the important issue of inter-generational redistribution \u2013 not least, in relation to the use of finite resources.<\/p>\n<p class=\"yunu3cvqabft7vifv\">Distinctions between stages of distribution are somewhat less clear when we consider their application. Where national statistics allow, for example, it is possible to trace the effect of taxes and transfers on different households, and to see the effect by comparing the market income distribution and the final distribution of income. However, this will include some of both redistribution and predistribution: not only taxation of income and cash transfers to those on low incomes, for example, but also in-kind transfers such as the provision of healthcare and education. The latter often exert the largest redistributive influence in lower-income countries, but are as much an attempt to reduce inequalities facing children now \u2013 and hence future income-earning inequalities \u2013 as they are aimed at improving the current final distribution.<\/p>\n<p class=\"yunu3cvqabft7vifv\">Meanwhile, the role of labour market and macroeconomic policies can be fundamental in setting the parameters on the distribution of opportunities to earn market income \u2013 for example, the importance of labour market changes in<a href=\"https:\/\/www.thebrokeronline.eu\/files\/images\/real-brazil-full-report.pdf\" target=\"_blank\">&nbsp;Brazil\u2019s inequality reduction<\/a> is often overlooked, in favour of a narrow focus on conditional cash transfers of which the direct effect has in fact been relatively limited.<\/p>\n<p class=\"yunu3cvqabft7vifv\">Figure 1, for example, shows the extent of changes between the distribution of original market incomes, and that of final incomes, for five countries where we have data. Aside from the much greater redistribution in the UK, one clear feature is that the \u2018middle 50%\u2019 (households in the fifth to ninth deciles) are relatively untouched as a group by redistribution; the clear majority involves a redistribution from the top 10% to the bottom 40%. The data are drawn from<a href=\"https:\/\/www.thebrokeronline.eu\/files\/aboutkings\/worldwide\/initiatives\/global\/intdev\/people\/sumner\/cobham-sumner-15march2013.pdf\" target=\"_blank\">&nbsp;our paper proposing the Palma<\/a>, this ratio of income shares of the top 10% to the bottom 40%, as a powerful policy measure of inequality. (Read also Sumner&#8217;s and Cobham&#8217;s blog post for the inequality debate: <a href=\"https:\/\/www.thebrokeronline.eu\/blogs\/inequality-debate\/palma-vs-gini-measuring-post-2015-inequality\/\" target=\"_blank\">Palma vs Gini measuring Post-2015 inequality<\/a>.)&nbsp;<\/p>\n<div class=\"object-\">\n<div class=\"embedded-image article_full\" style=\"width:580px;\">\n\t\t\t<a href=\"#\"><br \/>\n\t\t\t<img decoding=\"async\" src=\"https:\/\/www.thebrokeronline.eu\/files\/var\/broker\/storage\/images\/images\/figure1.final_income_minus_market_income\/727623-1-eng-gb\/figure1.final_income_minus_market_income_article_full.png\" alt=\"Figure 1: Total changes in shares of national income (final income minus market income)\" align=\"\"><br \/>\n\t\t<\/a><\/p>\n<div class=\"attribute-caption\" style=\"width:580px;\">\n\t\t\t\t\t\t\t\t\t<strong>Evert-jan Quak<\/strong>\n\t\t\t\t\t\t\t<\/div>\n<div class=\"attribute-caption\" style=\"width:580px;\">\n<p class=\"yunu3cvqabft7vifv\">Figure 1: Total changes in shares of national income (final income minus market income)<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p class=\"yunu3cvqabft7vifv\">\n<p class=\"yunu3cvqabft7vifv\">Figure 2 breaks this down further. Here we show the Palma ratio at different stages of the distribution. With the exception of Brazil, the original market income inequality is similar. The UK, however, is much more successful at reducing inequality by final incomes through redistribution. The type of redistribution is key: while most of the work is done in the UK in the taxes and transfers that change market incomes to disposable incomes, the opposite is true in the rest of the sample. Here, more redistribution happens from disposable to final income, meaning it results largely from the provision of in-kind transfers such as health and education provision.<\/p>\n<div class=\"object-\">\n<div class=\"embedded-image article_full\" style=\"width:566px;\">\n\t\t\t<a href=\"#\"><br \/>\n\t\t\t<img decoding=\"async\" src=\"https:\/\/www.thebrokeronline.eu\/files\/images\/727615-1-eng-gb\/figure-2-palma-inequality-at-different-stages-of-the-income-distribution_article_full.png\" alt=\"\" align=\"\"><br \/>\n\t\t<\/a><\/p>\n<div class=\"attribute-caption\" style=\"width:566px;\">\n\t\t\t\t\t\t\t\t\t<strong>Evert-jan Quak<\/strong>\n\t\t\t\t\t\t\t<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p class=\"yunu3cvqabft7vifv\">\n<p class=\"yunu3cvqabft7vifv\">The failure of effective direct taxation is the central explanation for much higher final income inequality. Domestic resistance, not least from the top 10%, is not unexpected; but doesn\u2019t explain why some countries manage better than others. The post-2015 framework could offer useful visibility and accountability to inequality overall, and also to the fairness of tax systems through metrics such as these.<\/p>\n<p class=\"yunu3cvqabft7vifv\">It is worth considering the international aspects also to the problem of effective direct taxation. As the global crisis continues to remind us, economic and financial globalisation has pulled far clear of the ability of national systems of regulation \u2013 including taxation. The ability&nbsp;to hide ownership of assets and income streams through secret bank accounts and anonymous companies poses a serious threat in multiple arenas, from terrorism financing to taxation. The related issues of&nbsp;corporate tax avoidance and evasion may be responsible for even greater tax losses. The easier it is for members of the elite to sidestep their social responsibilities with impunity, the less effective will direct taxation be \u2013 and the higher is likely to be inequality. This is why&nbsp;the G8 agenda is so important this year; but also why the importance of taxation and illicit financial flows must be reflected in the post-2015 development framework.<\/p>\n<\/p>\n<p class=\"yunu3cvqabft7vifv\">\n<p class=\"credit\">Photo credit main picture: Chris JL \/ London<\/p>\n<p>\t\t<!-- body -->\n\t<\/div>\n<\/article>\n<div class=\"clear\"><\/div>\n<section class=\"commentform content column wide left\">\n<div class=\"disqus_content\">\n\t\t\t<a name=\"comments\" id=\"comments\"><\/a><\/p>\n<div id=\"disqus_thread\"><\/div>\n<p>\t\t\t<script type=\"text\/javascript\">\n\t\t\t\t\/* * * CONFIGURATION VARIABLES: EDIT BEFORE PASTING INTO YOUR WEBPAGE * * *\/\n\t\t\t\tvar disqus_shortname = 'broker'; \/\/ required: replace example with your forum shortname\n\t\t\t\tvar disqus_identifier = '9654';\n\t\t\t\t\/* * * DON'T EDIT BELOW THIS LINE * * *\/\n\t\t\t\tfunction trackComment(comment)\n\t\t\t\t{\n\t\t\t\t\tconsole.log(comment);\n\t\t\t\t}\n\t\t\t\tfunction disqus_config() {\n\t\t\t\t\tthis.callbacks.onNewComment = [function() { \n\t\t\t\t\tconsole.log(comment);\n\t\t\t\t\t}];\n\t\t\t\t}\n\t\t\t\t(function() {\n\t\t\t\t\tvar dsq = document.createElement('script'); dsq.type = 'text\/javascript'; dsq.async = true;\n\t\t\t\t\tdsq.src = '\/\/' + disqus_shortname + 'https:\/\/www.thebrokeronline.eu\/files\/blogs\/spurring-economic-transition\/.disqus.com\/embed.js';\n\t\t\t\t\t(document.getElementsByTagName('head')[0] || document.getElementsByTagName('body')[0]).appendChild(dsq);\n\t\t\t\t})();\n\t\t\t<\/script><br \/>\n\t\t\t<!--\n\t\t\t<noscript>Please enable JavaScript to view the <a href=\"http:\/\/disqus.com\/?ref_noscript\">comments powered by Disqus.<\/a><\/noscript>\n\t\t\t<a href=\"http:\/\/disqus.com\" class=\"dsq-brlink\">comments powered by <span class=\"logo-disqus\">Disqus<\/span><\/a>\n\t\t\t-->\n\t\t<\/div>\n<\/section>\n<\/section>\n","protected":false,"raw":""},"excerpt":{"rendered":"<p>Progressive policies and the Palma Alex Cobham, Andy Sumner [&hellip;]<\/p>\n","protected":false},"author":0,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"template_2.php","meta":{"footnotes":""},"class_list":["post-1221","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Progressive policies and the Palma \/ Spurring economic transition \/ Blogs - The Broker<\/title>\n<meta name=\"description\" content=\"The failure of effective direct taxation is the central explanation for much higher final income inequality. Therefore Cobham and Sumner argue in favour of more fairness in tax systems through metrics.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.thebrokeronline.eu\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Progressive policies and the Palma \/ Spurring economic transition \/ Blogs - The Broker\" \/>\n<meta property=\"og:description\" content=\"The failure of effective direct taxation is the central explanation for much higher final income inequality. Therefore Cobham and Sumner argue in favour of more fairness in tax systems through metrics.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.thebrokeronline.eu\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/\" \/>\n<meta property=\"og:site_name\" content=\"Homepage - Broker Online\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"6 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Progressive policies and the Palma \/ Spurring economic transition \/ Blogs - The Broker","description":"The failure of effective direct taxation is the central explanation for much higher final income inequality. Therefore Cobham and Sumner argue in favour of more fairness in tax systems through metrics.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.thebrokeronline.eu\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/","og_type":"article","og_title":"Progressive policies and the Palma \/ Spurring economic transition \/ Blogs - The Broker","og_description":"The failure of effective direct taxation is the central explanation for much higher final income inequality. Therefore Cobham and Sumner argue in favour of more fairness in tax systems through metrics.","og_url":"https:\/\/www.thebrokeronline.eu\/blogs\/spurring-economic-transition\/progressive-policies-and-the-palma\/","og_site_name":"Homepage - Broker Online","twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"6 minutes"}},"_links":{"self":[{"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/pages\/1221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/types\/page"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/comments?post=1221"}],"version-history":[{"count":0,"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/pages\/1221\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.thebrokeronline.eu\/wp-json\/wp\/v2\/media?parent=1221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}