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The Redistributive Effect and Progressivity of Taxes Revisited: An International Comparison across the European Union

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  • Gerlinde Verbist
  • Francesco Figari

Abstract

Over the last few years concern for income inequality in Europe has increased remarkably. In this context, taxation is an important redistributive instrument, and we investigate the redistributive role of direct taxes. We focus on the EU-15 countries and the evolution over the period 1998-2008, using EUROMOD, the EU-wide tax-benefit model. The research aim of this paper is twofold. First, we investigate empirically whether there is a link between pre-tax income inequality and redistribution through taxes. Second, we test whether there is a relationship between progressivity and average tax level, the two building stones of the redistributive effect of taxes.

Suggested Citation

  • Gerlinde Verbist & Francesco Figari, 2014. "The Redistributive Effect and Progressivity of Taxes Revisited: An International Comparison across the European Union," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(3), pages 405-429, September.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201409)70:3_405:treapo_2.0.tx_2-f
    DOI: 10.1628/001522108X684529
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Moździerz Anna, 2015. "Tax Policy and Income Inequality in the Visegrad Countries," Naše gospodarstvo/Our economy, Sciendo, vol. 61(6), pages 12-18, December.
    2. Gerlinde Verbist & Francesco Figari, 2013. "GINI DP 88: The redistributive effect and progressivity of taxes revisited: An International Comparison across the European Union," GINI Discussion Papers 88, AIAS, Amsterdam Institute for Advanced Labour Studies.
    3. Morini, Matteo & Pellegrino, Simone, 2018. "Personal income tax reforms: A genetic algorithm approach," European Journal of Operational Research, Elsevier, vol. 264(3), pages 994-1004.
    4. Peter J. Lambert & Runa Nesbakken & Thor O. Thoresen, 2015. "A common base answer to "Which country is most redistributive?"," Discussion Papers 811, Statistics Norway, Research Department.
    5. Sarah Marchal & Mechelen, N. van, 2013. "GINI DP 87: Activation strategies within European minimum income schemes," GINI Discussion Papers 87, AIAS, Amsterdam Institute for Advanced Labour Studies.
    6. SOLOGON Denisa & VAN KERM Philippe & LI Jinjing & O'DONOGHUE Cathal, 2018. "Accounting for Differences in Income Inequality across Countries: Ireland and the United Kingdom," LISER Working Paper Series 2018-01, LISER.
    7. Silvia Rocha-Akis & Viktor Steiner & Christine Zulehner, 2016. "Distribution Effects of the Austrian Tax and Transfer System 2007-2016," WIFO Monatsberichte (monthly reports), WIFO, vol. 89(5), pages 347-359, May.
    8. Zhu, Junyi, 2015. "Bracket creep revisited - with and without r>g: Evidence from Germany," Discussion Papers 37/2015, Deutsche Bundesbank.
    9. Flores Unzaga, Ismael Martin & Zhu, Junyi, 2014. "Bracket Creep Revisited: Progressivity and a Solution by Adjusting the Rich Tax in Germany," MPRA Paper 57664, University Library of Munich, Germany.
    10. Flores Unzaga, Ismael Martin & Zhu, Junyi, 2014. "Bracket Creep Revisited: Progressivity and a Solution by Adjusting the Rich Tax in Germany," EconStor Preprints 100006, ZBW - German National Library of Economics.
    11. Oliver Hümbelin, 2016. "Ungleichheit und Umverteilung über das Steuersystem. Eine Analyse der Verteilungseffekte von direkten Steuern und steuerlichen Abzügen mit Steuerdaten des Kantons Aargau (2001-2011)," University of Bern Social Sciences Working Papers 23, University of Bern, Department of Social Sciences.
    12. Carmen COMANICIU, 2015. "The perception of young people regarding the Romanian taxation," Alma Mater University journal, Alma Mater University jornal of Sibiu, vol. 8(1), pages 40-44, June.

    More about this item

    Keywords

    income redistribution; income taxes; social insurance contributions; microsimulation; European Union;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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