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For a Welfare-Oriented Taxation Reform in Italy

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Author Info

  • Claudio De Vincenti

    ()
    (University of Rome "La Sapienza")

  • Ruggero Paladini

    ()
    (University of Rome "La Sapienza")

  • Corrado Pollastri

    ()
    (Centro Europa Ricerche)

Abstract

The Italian system of economic support for those on low incomes and for families is among the least effective in Europe. Its incoherent nature is shown by very large jumps in implicit marginal tax rates (taxation + family benefits). Italy needs a comprehensive reform of the treatment of income for tax and social welfare purposes. This paper proposes a new system of benefits and taxation for Italy based on a discussion of the theoretical properties of different schemes for integrating taxation and family benefits. The proposal combines tax allowance for work, designed to provide incentives to work, a flat rate family benefit and changes in the structure of tax rates which would incorporate the progressivity that is implicit in the current system of family benefits. The proposed system exhibits some of the characteristics of social dividend and negative income tax schemes. A micro-simulation exercise shows that the scheme would produce redistributive effects in favour of middle and low incomes and would lead to significant improvements in poverty and inequality indicators.

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Bibliographic Info

Article provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.

Volume (Year): 64 (2005)
Issue (Month): 2-3 (November)
Pages: 189-213

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Handle: RePEc:gde:journl:gde_v64_n2-3_p189-213

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Related research

Keywords: personal taxation; family benefits; social dividend and negative income tax;

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References

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  1. repec:rie:review:y:2004:v:3:i:2 is not listed on IDEAS
  2. Tito Boeri & Andrea Brandolini, 2004. "The Age of Discontent: Italian Households at the Beginning of the Decade," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(3-4), pages 449-487, December.
  3. Francesca Gastaldi & Paolo Liberati, 2005. "The Personal Income Tax in Italy: Why Does It Change?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 159-188, November.
  4. Atkinson Anthony B. & Brandolini Andrea, 2004. "I cambiamenti di lungo periodo nelle diseguaglianze di reddito nei paesi industrializzati," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 389-422.
  5. James Meade., . "Agathotopia," Hume Papers 16, David Hume Institute.
  6. repec:rie:review:v:9:y:2004:i:3:n:2 is not listed on IDEAS
  7. Carlo V Fiorio & Francesco D'Amuri, 2005. "Workers' Tax Evasion in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 247-270, November.
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Cited by:
  1. Massimo Baldini & Daniele Pacifico, 2009. "The recent reforms of the Italian personal income tax: distributive and efficiency effects," Department of Economics 0611, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".

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