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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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    More about this item

    Keywords

    income redistribution; income taxes; social insurance contributions; microsimulation; European Union;
    All these keywords.

    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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