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Tassazione e Sostegno del Reddito Familiare

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Author Info
Fernando DI NICOLA (ISAE - Institute for Studies and Economic Analyses)
Abstract

In this paper reforms of both present Italian personal income taxation and family allowances are evaluated with the aim to make the tax benefit system able to better support family burden. Two kind of reforms are considered: family quotient, based on the change of the tax unit from persons to families, and a new generalized family allowance, based on equivalent income and absorbing current family tax credits and allowances. After an evaluation of some limits of family quotient (higher effective marginal tax rate for spouse with lower income and a reduced support for low income families) and the current mix of tax credits and allowances (families with higher equivalent income can receive higher support for family burden), the comparison among two specific reforms is performed using a microsimulation model built on Bank of Italy survey about the Italian household and personal incomes. Results shows that it is possible to shape quotient family based reforms with redistributive effects, but also that the new generalized family allowance here presented is able to better support bottom quintiles of population, with or without dependent children. Each of the two reforms would cost about 9 billion of euro, an acceptable share of both the Italian GNP and the public budget.

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File URL: http://www.isae.it/Working_Papers/WP_118_2009_DiNicola.pdf
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Publisher Info
Paper provided by ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY) in its series ISAE Working Papers with number 118.

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Length: 36 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:isa:wpaper:118

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Related research
Keywords: Personal income taxation; Family allowances; Family quotient; Tax benefit system;

Find related papers by JEL classification:
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

This paper has been announced in the following NEP Reports:

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This page was last updated on 2009-12-9.

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