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The Personal Income Tax in Italy: Why Does It Change?


  • Francesca Gastaldi

    () (University of Rome "La Sapienza")

  • Paolo Liberati

    () (University of Bologna)


This paper analyses the effects of the personal income tax (PIT) changes implemented in Italy in the period 1995-2005 on redistribution and efficiency. on the redistributive side, using Lorenz dominance techniques and their correspondence with welfare prescriptions, the paper shows that many changes of PIT do not appear fruitful for the purpose of redistributin income. Furthermore, there is no conclusive evidence that PIT changes since 1995 are targeted on condition of greater needs, as those of households with children, especially because a significant part of tax credits paid for this purpose are non-refundable. Finally, on the efficiency side, PIT changes in the last decade do not avoid the presence of high effective marginal tax rates when PIT and child benefits are jointly considered.

Suggested Citation

  • Francesca Gastaldi & Paolo Liberati, 2005. "The Personal Income Tax in Italy: Why Does It Change?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 159-188, November.
  • Handle: RePEc:gde:journl:gde_v64_n2-3_p159-188

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    References listed on IDEAS

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    Cited by:

    1. Lisa Grazzini & Alessandro Petretto, 2006. "Vertical Tax Competition with Tax Sharing and Equalization Grants," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 65(1), pages 75-94, May.
    2. Francesca Gastaldi & Paolo Liberati & Chiara Rapallini, 2008. "A Decomposition of the Personal Income Tax Changes in Italy: 1995-2000," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(1), pages 87-114, March.
    3. Claudio De Vincenti & Ruggero Paladini & Corrado Pollastri, 2005. "For a Welfare-Oriented Taxation Reform in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 189-213, November.

    More about this item


    personal income tax; welfare; redistribution;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies


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