Advanced Search
MyIDEAS: Login to save this article or follow this journal

Flat tax reforms: a general equilibrium evaluation for Spain

Contents:

Author Info

  • Marta González-Torrabadella

    (Independent scholar)

  • Josep Pijoan-Mas

    (CEMFI and CEPR)

Abstract

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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/May2006/v30i2a5.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Article provided by Fundación SEPI in its journal Investigaciones Economicas.

Volume (Year): 30 (2006)
Issue (Month): 2 (May)
Pages: 317-351

as in new window
Handle: RePEc:iec:inveco:v:30:y:2006:i:2:p:317-351

Contact details of provider:
Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
Email:
Web page: http://www.fundacionsepi.es/

Order Information:
Email:
Web: http://www.fundacionsepi.es/revistas/presentacion.asp

Related research

Keywords: Income tax; heterogeneous agents; general equilibrium;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Josep Pijoan-Mas, 2006. "Precautionary Savings or Working Longer Hours?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 326-352, April.
  2. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2010. "The Macroeconomic Implications of Rising Wage Inequality in the United States," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 681-722, 08.
  3. Anil Kumar, 2005. "Lifecycle consistent estimation of effect of taxes on female labor supply in the US: evidence from panel data," Working Papers 0504, Federal Reserve Bank of Dallas.
  4. Floden, M. & Linde, J., 1998. "Idiosyncratic Risk in the U.S. and Sweden: Is there a Role for Government Insurance?," Papers 654, Stockholm - International Economic Studies.
  5. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 2-13.
  6. Ana Castaneda & Javier Diaz-Gimenez & Jose-Victor Rios-Rull, 2003. "Accounting for the U.S. Earnings and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 818-857, August.
  7. Juan Carlos Conesa & Dirk Krueger, 2002. "On the Optimal Progressivity of the Income Tax Code," Centro de Alti­simos Estudios Ri­os Pe©rez(CAERP) 4, Centro de Altisimos Estudios Rios Perez (CAERP).
  8. Luis A. Puch & Omar Licandro, 1997. "Are there any special features in the Spanish business cycle?," Investigaciones Economicas, Fundación SEPI, vol. 21(2), pages 361-394, May.
  9. Javier Díaz-Giménez & Josep Pijoan-Mas, 2006. "Flat Tax Reforms In The U.S.: A Boon For The Income Poor," Working Papers wp2006_0611, CEMFI.
  10. David Card, 1991. "Intertemporal Labor Supply: An Assessment," NBER Working Papers 3602, National Bureau of Economic Research, Inc.
  11. David Domeij & Jonathan Heathcote, 2004. "On The Distributional Effects Of Reducing Capital Taxes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 523-554, 05.
  12. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-22, May.
  13. Xisco Oliver & Amedeo Spadaro, 2003. "¿Renta Mínima o Mínimo Vital? Un Análisis sobre los Efectos Redistributivos de Posibles Reformas del Sistema Impositivo Español," DEA Working Papers 1, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  14. Aiyagari, S Rao, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 659-84, August.
  15. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
  16. Hopenhayn, Hugo A & Prescott, Edward C, 1992. "Stochastic Monotonicity and Stationary Distributions for Dynamic Economies," Econometrica, Econometric Society, vol. 60(6), pages 1387-406, November.
  17. Ventura, G., 1997. "Flat Tax Reform: A Quantitative Exploration," UWO Department of Economics Working Papers 9706, University of Western Ontario, Department of Economics.
  18. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  19. Fidel Picos Sánchez, . "Las Rentas De Capital En Phogue: Análisis De Su Fiabilidad Y Corrección Mediante Fusión Estadística," Working Papers 31-03 Classification-JEL , Instituto de Estudios Fiscales.
  20. David Altig, 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, vol. 91(3), pages 574-595, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. repec:ese:emodwp:em2-08 is not listed on IDEAS
  2. Paulus, Alari & Peichl, Andreas, 2008. "Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives," IZA Discussion Papers 3721, Institute for the Study of Labor (IZA).
  3. Peichl, Andreas, 2008. "The Benefits of Linking CGE and Microsimulation Models: Evidence from a Flat Tax Analysis," IZA Discussion Papers 3715, Institute for the Study of Labor (IZA).
  4. repec:ese:emodwp:em1-13 is not listed on IDEAS
  5. Paulus, Alari & Peichl, Andreas, 2009. "Effects of flat tax reforms in Western Europe," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 620-636, September.
  6. repec:ese:iserwp:2008-06 is not listed on IDEAS
  7. repec:hal:wpaper:halshs-00587714 is not listed on IDEAS
  8. Peichl, Andreas & Paulus, Alari, 2007. "Effects of flat tax reforms in Western Europe on equity and efficiency," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 08-4, University of Cologne, FiFo Institute for Public Economics.
  9. repec:ese:iserwp:2009-02 is not listed on IDEAS

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iec:inveco:v:30:y:2006:i:2:p:317-351. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabel Sánchez-Seco).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.