Shifting taxes from labour to property. A simulation under labour market equilibrium

Francesco Figari (), Ugo Colombino, Flavia Coda Moscarola and Marilena Locatelli

No EM20/14, EUROMOD Working Papers from EUROMOD at the Institute for Social and Economic Research

Abstract: A tax shifting from labour income to housing taxation is generally advocated on efficiency grounds. However, most of the empirical literature focuses on the distributional implications of property tax reforms without paying much attention to potential consequences on the labour market. The aim of this paper is to fill this gap by investigating the effects of a tax shifting from labour income to property, guaranteeing revenue neutrality, and to assess the consequences of labour market equilibrium, both on occupation rates and income distribution. We propose to consider a hypothetical tax reform in Italy which uses the revenue of the tax on house property (actually implemented in 2012) for increasing tax credits on low incomes and making them refundable. In order to evaluate the reform we have developed a structural model of household labour supply which takes into account the labour market equilibrium conditions. Overall, the simulated policy provides a more effective income support and better inc

Date: 2014-12-23
New Economics Papers: this item is included in nep-cmp, nep-pbe, nep-pub and nep-ure
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Related works:
Working Paper: Shifting Taxes from Labour to Property. A Simulation under Labour Market Equilibrium (2015)
Working Paper: Shifting Taxes from Labour to Property: A Simulation under Labour Market Equilibrium (2015)
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