Prof. Carlo Perroni

Income Tax Progressivity

Carlo Perroni’s visit to CES will be devoted to a joint research project with Andreas Haufler on the relationship between international economic integration and income tax progressivity. While the distribution of income has become more concentrated in recent years, income taxation in most countries has not become more progressive. A possible explanation is that higher earners are inter-jurisdictionally mobile, which gives rise to a race to the bottom in tax rates amongst tax competing jurisdictions. This may be plausible for certain occupations, but less so for other high-earning occupations that involve jurisdiction-specific investments. The researchers propose an alternative explanation that does not hinge on factor mobility: progressive taxes interfere inefficiently with performance-based contracts, where bonuses are used by employers to incentivise workers’ efforts. If market integration makes projects riskier, it can exacerbate the contractual inefficiencies associated with progressive taxation, producing a downward pressure on tax progressivity.

Mr Perroni’s research interests lie mainly in the areas of international economic relations, the economics of taxation and environmental policy. His research on these topics has been published in journals such as the Journal of International Economics, the International Economic Review, the Journal of Development Economics, the Journal of Public Economics and the Review of Economic Studies. Current research topics related to CSGR themes and activities include the relationship between domestic policy credibility and international policy cooperation, the design of transitional regimes for developing countries under the GATT/WTO and the international transmission of economic culture through trade.

Carlo Perroni is Professor of Economics at the University of Warwick and a CESifo Research Network Fellow. He holds a Doctorate in Economics from Pavia University and, prior to arriving at Warwick, was an Assistant Professor at the University of Western Ontario, where he carried out research on environmental economics and international trade (jointly with John Whalley and Tom Rutherford).