The potential implications of using the family as opposed to the individual as the unit of taxation are not clear. This applies both to work incentives and distributional outcomes. In this paper we evaluate the effects of a hypothetical reform of Italian income taxation both on labour supply incentives and on redistribution of income between families with different composition and income levels. In particular, we analyze the potential effects of a shift from the current system of individual taxation to a system of family taxation similar to the French family-splitting approach by implementing a tax-benefit model. Based on data from the Bank of Italy Survey of Household Income and Wealth, our simulations show a reduction in the degree of progressivity and a disincentive for the labour supply of additional earners within the family.

Family taxation and labour market participation incentives in Italy / A.Aassve; M.G.Pazienza; C.Rapallini. - In: ECONOMIA PUBBLICA. - ISSN 0390-6140. - STAMPA. - Numero Unico(2010), pp. 189-217.

Family taxation and labour market participation incentives in Italy

PAZIENZA, MARIA GRAZIA;RAPALLINI, CHIARA
2010

Abstract

The potential implications of using the family as opposed to the individual as the unit of taxation are not clear. This applies both to work incentives and distributional outcomes. In this paper we evaluate the effects of a hypothetical reform of Italian income taxation both on labour supply incentives and on redistribution of income between families with different composition and income levels. In particular, we analyze the potential effects of a shift from the current system of individual taxation to a system of family taxation similar to the French family-splitting approach by implementing a tax-benefit model. Based on data from the Bank of Italy Survey of Household Income and Wealth, our simulations show a reduction in the degree of progressivity and a disincentive for the labour supply of additional earners within the family.
Numero Unico
189
217
A.Aassve; M.G.Pazienza; C.Rapallini
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2158/389077
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