Arbeitspapier
Taxing income or consumption: Macroeconomic and distributional effects for Italy
We study a set of tax reforms introducing a budget-neutral tax shift in Italy, from labour income to consumption taxes. To this end we use a microsimulation model to provide the output with which to estimate the parameters of tax functions in an overlapping-generations computable general equilibrium model. In doing so we make marginal and average tax rates bivariate non-linear functions of capital income and labour income. The methodology allows for the representation of the non-linearities of the tax and social benefit system and interactions between capital and labour incomes. The linked macro model then simulates labour supply, consumption and savings in a dynamic setting, thus accounting for behavioural and general equilibrium effects within a life-cycle optimization framework. Our simulations show that a tax shift made by cutting personal income tax rates might bring significant efficiency gains in Italy, with limited regressive effects, notwithstanding the revenue-compensating increase in consumptions taxes.
- Language
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Englisch
- Bibliographic citation
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Series: JRC Working Papers on Taxation and Structural Reforms ; No. 13/2021
- Classification
-
Wirtschaft
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Fiscal Policies and Behavior of Economic Agents: Household
Intertemporal Household Choice; Life Cycle Models and Saving
Computable and Other Applied General Equilibrium Models
- Subject
-
computable general equilibrium
overlapping generations
taxation
microsimulation
Italy
tax shift
- Event
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Geistige Schöpfung
- (who)
-
D'Andria, Diego
DeBacker, Jason
Evans, Richard W.
Pycroft, Jonathan
Zachlod-Jelec, Magdalena
- Event
-
Veröffentlichung
- (who)
-
European Commission, Joint Research Centre (JRC)
- (where)
-
Seville
- (when)
-
2021
- Handle
- Last update
-
20.09.2024, 8:22 AM CEST
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- D'Andria, Diego
- DeBacker, Jason
- Evans, Richard W.
- Pycroft, Jonathan
- Zachlod-Jelec, Magdalena
- European Commission, Joint Research Centre (JRC)
Time of origin
- 2021
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