Dynamic scoring of tax reforms in the European Union

Mathias Dolls, Andreas Peichl, Christian Wittneben, Anamaria Maftei, Janos Varga, Sara Riscado and Salvador Barrios ()

No EM14/17, EUROMOD Working Papers from EUROMOD at the Institute for Social and Economic Research

Abstract: In this paper, we present the first dynamic scoring exercise linking a multi†country microsimulation and DSGE models for all countries of the European Union. We illustrate our novel methodology analysing a hypothetical tax reform for Belgium. We then evaluate real tax reforms in Italy and Poland. Our approach takes into account the feedback effects resulting from adjustments in the labor market and the economy†wide reaction to the tax policy changes. Our results suggest that accounting for the behavioral reaction and macroeconomic feedback to tax policy changes enriches the tax reforms' analysis, by increasing the accuracy of the direct fiscal and distributional impact assessment provided by the microsimulation model for the tax reforms considered. Our results are in line with previous dynamic scoring exercises, showing that most tax reforms entail relatively smaller feedback effects in terms of the labor tax revenues for tax cuts benefiting workers, compared with the ones granted to firms.

Date: 2017-10-30
New Economics Papers: this item is included in nep-acc, nep-cmp, nep-dge, nep-pbe and nep-pub
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Related works:
Journal Article: DYNAMIC SCORING OF TAX REFORMS IN THE EUROPEAN UNION (2019)
Working Paper: DYNAMIC SCORING OF TAX REFORMS IN THE EUROPEAN UNION (2019)
Working Paper: Dynamic Scoring of Tax Reforms in the European Union (2018)
Working Paper: Dynamic scoring of tax reforms in the European Union (2018)
Working Paper: Dynamic scoring of tax reforms in the European Union (2017)
Working Paper: Dynamic scoring of tax reforms in the European Union (2016)
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