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A reform proposal of Family income tax deductions and of Family Benefits in Italy

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  • Paolo Bosi

    ()

Abstract

In the Italian fiscal system the monetary transfers supporting families in their parental responsibilities are realized with two different tools: a tax expenditure (tax credits for dependent members of the family) and a family benefit delivered by INPS, the most important central public insurance institution. These instruments have been heavily criticized as for the weak target efficiency, distorted selectivity, lack of universality. This paper proposed a unification of these provisions on the expenditure side introducing a Child benefit which realizes selectivity using the recently reformed Indicator of the economic condition of household (Isee), flat till to 15 thousands Isee and then linearly declining till 25000 euro of Isee, of amount determined according an equivalence scale. The reform utilizes 14,3 billion of euro out of the 18,5 devoted to the present provisions. An accurate distributional analysis using the CAPP welfare microsimulation model shows many positive aspects of the proposal. The article concludes suggesting the opportunity of coordinate this reform with the introduction of a new provision against poverty.

Suggested Citation

  • Paolo Bosi, 2016. "A reform proposal of Family income tax deductions and of Family Benefits in Italy," Center for the Analysis of Public Policies (CAPP) 0138, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
  • Handle: RePEc:mod:cappmo:0138
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    Keywords

    Child benefits; Social assistance; poverty;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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