Using a microsimulation model for Italy, we discuss the effects on the distribution of income of a Long Term Care (LTC) scheme. We consider eight alternative options for financing the scheme taken from the most relevant international experiences (Germany, Luxembourg and Japan) and from the current Italian debate: these options include general taxation, a new tax proportional to income (with or without a ceiling), a tax on income for people older than 40, a tax proportional to a broader measure of the economic conditions of the family and indirect taxation. In particular, we show that by including wealth in a means testing we get important intergenerational distributive effects. We also discuss the implications of two alternative choices for the distribution of beneficiaries: both the current distribution in the major Italian LTC program and that of the current German scheme turn out to have a powerful distributive impact.
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Find related papers by JEL classification: H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies