Confidence Intervals for the Suits Index

The Suits Index is often used in tax policy analysis to measure the degree of progressivity of a tax, or to analyze changes in progressivity under alternative tax regimes. As a point estimator, however, the Index provides researchers with no assistance in assessing whether changes are in fact statistically significant. We present a bootstrap methodology by which researchers can estimate confidence intervals for differences in Suits Indices. We also illustrate the use of that methodology with an application for the U.S. income tax, simulating the effects of removing housing deductions.