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The Erosion of the Personal Income Tax Base in Italy: Equity Aspects

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  • Bruno Bises
  • Antonio Scial?

Abstract

This paper aims at analyzing the distributional (and revenue) effects of the deviations of the personal income tax (PIT) base in Italy from the taxpayer?s total income that was proposed as tax base by the Commission for the Study of Tax Reform in 1964 (which was inspired by the Schanz-Haig-Simons concept of income). It is clear in both the Report of the Commission and Cosciani?s writings that an equitable tax system requires that all income items are taxed within the PIT. However, financial income in Italy is excluded from the PIT since its introduction in 1974, and the erosion of the PIT base has continued to date. In the second part of the paper the contribution of the different types of income to the PIT base in Italy with respect to GDP between 1980 and 2012 is analyzed, and an assessment of the redistributive effect of the hypothetical inclusion of financial income in the PIT base is provided, using data from tax returns for 2010.

Suggested Citation

  • Bruno Bises & Antonio Scial?, 2014. "The Erosion of the Personal Income Tax Base in Italy: Equity Aspects," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2014(3), pages 145-166.
    • Handle: RePEc:fan:epepep:v:html10.3280/ep2014-003008
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    References listed on IDEAS

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    1. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747.
    2. Thomas Piketty & Emmanuel Saez, 2012. "A Theory of Optimal Capital Taxation," NBER Working Papers 17989, National Bureau of Economic Research, Inc.
    3. Bert Brys & Stephen Matthews & Jeffrey Owens, 2011. "Tax Reform Trends in OECD Countries," OECD Taxation Working Papers 1, OECD Publishing.
    4. (IFS), Institute for Fiscal Studies (ed.), 2010. "Dimensions of Tax Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553754.
    5. Mr. Howell H Zee, 2005. "Personal Income Tax Reform: Concepts, Issues, and Comparative Country Developments," IMF Working Papers 2005/087, International Monetary Fund.
    6. Michelle Harding, 2013. "Taxation of Dividend, Interest, and Capital Gain Income," OECD Taxation Working Papers 19, OECD Publishing.
    7. Mr. Thomas Dalsgaard, 2005. "U.S. Tax Reform: An Overview of the Current Debate and Policy Options," IMF Working Papers 2005/138, International Monetary Fund.
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    Citations

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    Cited by:

    1. Bruno Bises & Francesco Bloise & Antonio ScialÃ, 2021. "Functional income distribution, inequality and the effectiveness of fiscal redistribution: evidence from OECD countries," Public Finance Research Papers 49, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    2. Stefano Boscolo, 2021. "On the horizontal inequity effect of the erosion of the pit base: the case of Italy," Politica economica, Società editrice il Mulino, issue 1, pages 43-82.
    3. Bruno Bises & Francesco Bloise & Antonio Scialà, 2024. "Labor share as an "automatic stabilizer" of income inequality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(2), pages 511-532, April.
    4. Stefano Boscolo, 2020. "On the Horizontal Inequity Effect of the Erosion of the PIT Base: The Case of Italy," Department of Economics 0176, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    5. Paolo Di Caro, 2017. "Analisi distributiva dell?IRPEF utilizzando i microdati di fonte fiscale," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2017(1), pages 35-59.
    6. Stefano Boscolo, 2019. "Quantifying the Redistributive Effect of the Erosion of the Italian Personal Income Tax Base: A Microsimulation Exercise," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2019(2), pages 39-80.

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    More about this item

    Keywords

    Imposta personale sul reddito; erosione fiscale; tassazione dei redditi delle attivit? finanziarie; riforma tributaria;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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