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# Suits index

This article has been reviewed by the following Topic Editor: S. Niggol Seo PhD

Table 1. Suits Index Estimates of the
U.S. Tax System, 2001, by Tax Type
Tax Type Suits Index
Federal Income 0.344
Federal Social Insurance -0.159
Federal Excise -0.366
Federal Corporate 0.398
Federal Estate 0.790
State and Local -0.066
Total Federal 0.144
All Taxes 0.088
The Suits Index for state and local
taxes is based on 2002 data.

The Suits Index, developed by Daniel Suits in the 1970s, calculates a single number that measures tax progressivity. The approach basically compares the cumulative share of income received by taxpayers, ordered from lowest to highest, to their cumulative share of taxes paid. For a progressive (regressive) tax, the share of taxes paid will tend to be less (more) than the share of income as we move up the income spectrum. Other tax progressivity indices have been developed but the Suits Index remains the most widely used approach.

While the calculation details are not presented here, the Suits Index is a number ranging between –1 and +1. A negative Suits Index means that the tax is regressive while a positive index indicates a progressive tax (with a value of zero for a proportional tax). The Suits Index can be used to compare the degree of progressivity of different tax types as well as determine whether a tax becomes more or less progressive over time.

The Suits Index has been used to estimate the progressivity of different tax types in the U.S. for 2001. Table 1 shows that the U.S. tax system contains a mixture of progressive and regressive taxes. The federal estate tax is the most progressive tax while the federal corporate and income taxes are also progressive. On the other hand, federal excise taxes are the most regressive. Federal social insurance taxes and overall state and local taxes are also regressive. When all federal taxes are considered, the Suits Index of 0.144 indicates that federal taxation is progressive. The entire U.S. tax system is also progressive, but the Suits Index of 0.088 is closer to a value of zero (a proportional tax) than just the federal tax system.

## Citation

Brian Roach (Lead Author);S. Niggol Seo PhD (Topic Editor) "Suits index". In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). [First published in the Encyclopedia of Earth November 1, 2006; Last revised Date November 1, 2006; Retrieved May 24, 2013 <http://www.eoearth.org/article/Suits_index>

## The Author

Brian Roach received a Ph.D. in environmental policy analysis from the University of California, Davis in 1995 and an M.S. in agricultural economics from The Pennsylvania State University in 1990. From 1997-2001, he worked at the University of Maine, Orono as a researcher and teacher. His research background has focused on non-market valuation of natural resources, including drinking water quality, water-based recreation, wildlife, and subsistence activities. As a teacher, he has taught courses ... (Full Bio)