The changes to the Italian tax and welfare system implemented in 2022: fairness and efficiency profiles

Emanuele Dicarlo (), Pasquale Recchia and Antonella Tomasi

No 748, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The paper presents the effects of two revision interventions of the Italian tax and benefits system implemented in 2022: (i) the introduction of the single and universal allowance for children (AUU); (ii) changes to the structure of personal income tax (IRPEF). Using BIMic, the static microsimulation model of the Bank of Italy, the analysis shows how the combined effect of the two interventions increases the progressivity of the system and reduces inequality (these effects are mainly attributable to the introduction of the AUU). The two changes - and in particular the intervention on personal income tax - also contribute to reducing the monetary disincentives to the supply of labour both at the extensive margin and at the intensive margin and contribute to mitigating the irregular trend of the effective marginal rates.

Keywords: family policies; personal income tax; redistribution; efficiency; microsimulation (search for similar items in EconPapers)
JEL-codes: C15 C63 D31 H2 H22 H23 H24 H31 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-cmp, nep-eur, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_748_23

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