Quantifying the Redistributive Effect of the Erosion of the Italian Personal Income Tax Base: A Microsimulation Exercise

Stefano Boscolo ()

ECONOMIA PUBBLICA, 2019, vol. 2019/2, issue 2, 39-80

Abstract: In recent years several sources of income have been excluded from the Italian Personal Income Tax (PIT) base and subject to alternative proportional systems or totally exempt from taxation. These changes have contributed to making PIT even more selective, accentuating vertical equity issues that have accompanied it since it was introduced in 1974. The aim of this paper is to calculate the redistributive effect following the erosion of the PIT base and the contribution of this phenomenon in determing the redistributive power of the Italian tax system, as well as the distribution of the fiscal benefits and burdens by deciles of income under the alternative tax rules considered. Using a static microsimulation model, the paper compares various versions of the tax system within a counterfactual logic: on the one hand, the existing legislation as of 2014 consisting of PIT and those incomes subject to substitute taxes or tax-free in this study; on the other hand, an hypothetical legislation which takes as a reference point the Comprehensive Income Tax (CIT) scheme and includes in its base all incomes replicated. The results demonstrate that the erosion of the PIT base has reduced the redistributive effect and the progressive nature of the Italian tax system.

JEL-codes: D3 H2 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.francoangeli.it/riviste/Scheda_Rivista. ... 908&Tipo=ArticoloPDF (text/html)
Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fan:epepep:v:html10.3280/ep2019-002003

Ordering information: This journal article can be ordered from
http://www.francoang ... io.aspx?IDRivista=16

Access Statistics for this article

ECONOMIA PUBBLICA is currently edited by FrancoAngeli

More articles in ECONOMIA PUBBLICA from FrancoAngeli Editore
Bibliographic data for series maintained by Stefania Rosato ().