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Family splitting versus joint taxation: a case-study

Author

Listed:
  • S. Verzillo

    () (University of Milan and CRISP)

  • A. Santoro

    () (University of Milan-Bicocca and Dondena Center for Research on Social Dynamics and Public Policy - Bocconi University)

  • M. Mezzanzanica

    () (University of Milan-Bicocca and CRISP)

Abstract

Abstract In this paper we compare two tax systems which may be used to introduce family-based taxation in a Region of Italy, Lombardy. The French-like tax system, which uses a family quotient, and a German-like tax system, which applies joint taxation and decreasing-in-income children allowances. Our comparison takes into account revenue neutrality, labour supply effects and different degrees of inequality aversion by using an abbreviated social welfare function a la Sen. Our results show that, although the family quotient performs relatively better in efficiency terms, welfare is unambiguously higher under the German-like tax system provided the social planner is to some extent inequality averse.

Suggested Citation

  • S. Verzillo & A. Santoro & M. Mezzanzanica, 2017. "Family splitting versus joint taxation: a case-study," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(2), pages 337-354, August.
  • Handle: RePEc:spr:epolit:v:34:y:2017:i:2:d:10.1007_s40888-016-0039-x
    DOI: 10.1007/s40888-016-0039-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Income taxation; Administrative data; Inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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