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Flat tax reforms: a general equilibrium evaluation for Spain Author info | Abstract | Publisher info | Download info | Related research | Statistics Marta González-Torrabadella
Josep Pijoan-Mas (CEMFI and CEPR)
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This paper quantifies the aggregate and distributional implications of an array of revenue neutral flat tax reforms for Spain. A standard general equilibrium economy with heterogeneous agents is used to evaluate the impact of the tax reforms. We find that different flat tax reforms may generate important changes of aggregate allocations in opposite directions. Among all the reforms, a marginal tax equal to 23.11% and a fixed deduction equal to 30% of per capita income will yield increases in aggregate output, aggregate consumption and labor productivity equal to 5.1%, 4.8% and 2.8% respectively. Admittedly, this type of reforms also generate increases in the gini indexes of after tax income and consumption. However, the proposed reform reduces the tax bill of the bottom 60% of the income distribution.
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Article provided by Fundación SEPI in its journal Investigaciones Economicas .
Volume (Year): 30 (2006)
Issue (Month): 2 (May)
Pages: 317-351
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Handle: RePEc:iec:inveco:v:30:y:2006:i:2:p:317-351Contact details of provider: Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain Email: Web page: http://www.funep.es/
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Keywords: Income tax ; heterogeneous agents ; general equilibrium ; Other versions of this item:
Find related papers by JEL classification: H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
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