Family splitting versus joint taxation: a case-study

Stefano Verzillo, Alessandro Santoro and M. Mezzanzanica ()
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M. Mezzanzanica: University of Milan-Bicocca and CRISP

Economia Politica: Journal of Analytical and Institutional Economics, 2017, vol. 34, issue 2, No 9, 337-354

Abstract: Abstract In this paper we compare two tax systems which may be used to introduce family-based taxation in a Region of Italy, Lombardy. The French-like tax system, which uses a family quotient, and a German-like tax system, which applies joint taxation and decreasing-in-income children allowances. Our comparison takes into account revenue neutrality, labour supply effects and different degrees of inequality aversion by using an abbreviated social welfare function a la Sen. Our results show that, although the family quotient performs relatively better in efficiency terms, welfare is unambiguously higher under the German-like tax system provided the social planner is to some extent inequality averse.

Keywords: Income taxation; Administrative data; Inequality (search for similar items in EconPapers)
JEL-codes: D31 D63 H24 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s40888-016-0039-x

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