Reducing The Tax Wedge On Labour Income By Reforming Housing Taxation: Can This Reform Achieve A Political Majority?
AbstractIn this paper we study whether an IRPEF reform aimed at reducing the tax burden on labour income - via the enlargement of the tax base due to the inclusion of imputed rent for owner-occupied dwellings - can achieve a political majority. We use a micro-simulation model designed precisely to examine housing taxation in Italy, and compare the tax burden before and after the reform under three alternative scenarios, all designed in order to keep current revenues at a constant level. Our main result is that, in terms of all three scenarios, the share of the winners is consistent - between 46 and 48 percent - while the share of the losers is around one third of all taxpayers. The percentage of winners is further increased when considering households instead of individual taxpayers, at about 50 percent; however, the share of losers is also substantial - in this case about 40 percent. Overall, then, a political majority supporting the change is presumably obtainable. Finally, it can be seen that reducing the tax wedge on labour income while contemporaneously taxing more housing, would generate a redistribution towards younger generations.
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Bibliographic InfoArticle provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.
Volume (Year): 70 (2011)
Issue (Month): 1 (January)
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Web page: http://www.gde.unibocconi.it/
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
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- Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012.
"Taxing home ownership: distributional effects of including net imputed rent in taxable income,"
EUROMOD Working Papers
EM4/12, EUROMOD at the Institute for Social and Economic Research.
- Francesco Figari & Alari Paulus & Holly Sutherland & Panos Tsakloglou & Gerlinde Verbist & Francesca Zantomio, 2012. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," DEOS Working Papers 1209, Athens University of Economics and Business.
- Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute for the Study of Labor (IZA).
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