Reforming the Personal Income Tax and the Family Allowance in Italy: A Proposal

M. Matteuzzi and S. Toso

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We illustrate a proposal to reform the personal income tax and the family allowance in Italy which aims at attaining a fair tax treatment of the family, laying emphasis on the redistributive processes in favour of large and poor households. Our proposal is based on a simplification of the tax rate schedule (with a reduction of income brackets) and a new design of the tax credits for dependents which implies the fiscal exemption of a sort of basic income, which is decreasing as the income of the household increases. The new scheme of supplementary tax credits for dependents, related to family income thresholds, would match the need to keep into account the economic conditions of the household with the need to avoid the abandonment of the definition of ability to pay on individual basis. The proposal also aims at attaining a closer integration between the personal income taxation and the family allowance, with a sizable revaluation of the amount of family allowances and its extension to self-employee. The distributional analysis, using the tax-benefit model DIRIMOD, shows a slight revenue loss and a significant increase, with respect to the 1995 system, in both the progressivity and the redistributive impact of the income tax. The distributional effects are even stronger if we keep into consideration the reformed system of family allowances.

Date: 1996-09
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://amsacta.unibo.it/5044/1/266.pdf (application/pdf)

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:bol:bodewp:266

Access Statistics for this paper

More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna ().