Progressive Tax Systems Reduce Inequality More than Flat Tax Models

Abstract

This study investigates the structure and reform dynamics of personal income tax (PIT) systems across 50 countries, focusing on their impact on revenue generation, equity, and policy efficiency. Despite extensive global adoption, a critical knowledge gap persists regarding the comparative effectiveness of flat versus progressive tax systems, particularly in federal and transitional economies. Employing a mixed-method explanatory design, the research integrates macro-level panel data analysis with expert interviews to evaluate institutional, economic, and behavioural dimensions of PIT. Findings reveal a global shift toward simplification and rate flattening, which improves administrative efficiency but weakens income redistribution in the absence of compensatory mechanisms. Regression results confirm that multi-bracket progressive systems correlate with lower inequality, while qualitative insights emphasise institutional capacity and governance as pivotal reform determinants. The study's implications underscore the need for equity-sensitive PIT policy recalibration and call for future micro-level research to deepen understanding of taxpayer behaviour and distributive outcomes.