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Does Italy need family income taxation?

Arnstein Aassve, Maria Grazia Pazienza () and Chiara Rapallini ()
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Maria Grazia Pazienza: Dipartimento Studi sullo Stato, Università degli Studi di Firenze

No 77, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: The possible implications of using the family as opposed to the individual as the unit of taxation are not clear. This applies both to work incentives and distributional outcomes. In this paper we evaluate the effects of a hypothetical reform for Italian income taxation with respect to labour supply. In particular, we analyze potential labour supply effects by considering a shift from the current system of individual taxation to a system of family taxation similar to the French family splitting approach. The analysis is based on an econometric model of labour supply that is embedded in a tax–benefit model. Using data from the Bank of Italy Survey of Household Income and Wealth, our simulation results show relatively small effects on the total labour supply but a decrease in female labour supply.

Keywords: tax benefit system; fiscal reform; labour supply; microsimulation (search for similar items in EconPapers)
JEL-codes: D31 H24 H31 J22 C15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-eec, nep-pbe and nep-pub
Date: 2007
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