Effects of flat tax reforms in Western Europe

Alari Paulus and Andreas Peichl

Journal of Policy Modeling, 2009, vol. 31, issue 5, 620-636

Abstract: Recent success of the flat income tax in Eastern Europe raises questions about whether there is scope for such a policy reform in Western Europe as well. We address this by estimating the potential distributional impact of various flat taxes for selected Western European countries. Our simulations show that in specific circumstances a revenue neutral flat tax reform can increase income equality and improve work incentives; however, in most cases there is an equity-efficiency trade-off. We show that the specific flat tax design and the welfare state regime play a key role.

Keywords: Flat; tax; reform; Income; inequality; Labour; supply; incentives; Microsimulation (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (34)

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Working Paper: Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:31:y:2009:i:5:p:620-636

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