Personal Income Tax Decentralization, Inequality and Social Welfare
AbstractThis paper elaborates and evaluates a model for the decentralization of personal income tax which is consistent with the optimal redistribution model proposed by Tresch (2002), within a framework od social welfare à la Atkinson and Bourguignon (1987). Each region applies to its constituents a progressive tax, and the central government establishes a surcharge (or deduction) proportional to the income of individuals, net of the respective regional taxes. Our paper presents the conditions which permit this model to be recommended in terms of the reduction of income inequality and the increases of welfare, in each region and in the country as a whole. The theoretical results are applied to the Spanish IRPF, by the performance of various microsimulation exercises.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/17.
Date of creation: 2004
Date of revision:
personal income tax; decentralization; inequality; social welfare.;
Other versions of this item:
- Julio LÃ³pez-Laborda & Jorge Onrubia, 2005. "Personal Income Tax Decentralization, Inequality, and Social Welfare," Public Finance Review, , , vol. 33(2), pages 213-235, March.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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