The French do it better. The distributive effect of introducing French family fiscal policies in Italy

Paolo Brunori (), Maria Luisa Maitino (), Letizia Ravagli () and Nicola Sciclone ()
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Paolo Brunori: Università degli Studi di Firenze
Maria Luisa Maitino: Istituto Regionale Programmazione Economia della Toscana
Letizia Ravagli: Istituto Regionale Programmazione Economia della Toscana
Nicola Sciclone: Istituto Regionale Programmazione Economia della Toscana

No 04-2019, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: Italy has one of the lowest fertility rates in the world. A solution, often advocated to incentivize fertility, could be to reform the Italian fiscal system, taking inspiration from the French fiscal family treatment. This would imply introducing the quotient system, where taxation is not on an individual basis, as in Italy, but is applied to the family as a whole, and the cash benefits provided to families in France. The purpose of our paper is to assess the distributive effects of such a fiscal reform. We estimate these effects using MicroReg, a static microsimulation model that is able to predict the first-order effects of fiscal reforms. We show that a shift to the French income tax system would lead to decreased income inequality and a substantial tax reduction for households with three children, especially those with medium-high income. The new income tax would result in a substantial disincentive to female labor supply, albeit mitigated by greater progressivity in favor of low-income groups with children.

Keywords: Microsimulation; Family quotient; Fertility; Inequality (search for similar items in EconPapers)
JEL-codes: D63 H24 J13 J22 (search for similar items in EconPapers)
Pages: 277
Date: 2019-10, Revised 2019-10
New Economics Papers: this item is included in nep-eur
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