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For a Welfare-Oriented Taxation Reform in Italy

Author

Listed:
  • Claudio De Vincenti

    (University of Rome "La Sapienza")

  • Ruggero Paladini

    (University of Rome "La Sapienza")

  • Corrado Pollastri

    (Centro Europa Ricerche)

Abstract

The Italian system of economic support for those on low incomes and for families is among the least effective in Europe. Its incoherent nature is shown by very large jumps in implicit marginal tax rates (taxation + family benefits). Italy needs a comprehensive reform of the treatment of income for tax and social welfare purposes. This paper proposes a new system of benefits and taxation for Italy based on a discussion of the theoretical properties of different schemes for integrating taxation and family benefits. The proposal combines tax allowance for work, designed to provide incentives to work, a flat rate family benefit and changes in the structure of tax rates which would incorporate the progressivity that is implicit in the current system of family benefits. The proposed system exhibits some of the characteristics of social dividend and negative income tax schemes. A micro-simulation exercise shows that the scheme would produce redistributive effects in favour of middle and low incomes and would lead to significant improvements in poverty and inequality indicators.

Suggested Citation

  • Claudio De Vincenti & Ruggero Paladini & Corrado Pollastri, 2005. "For a Welfare-Oriented Taxation Reform in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 189-213, November.
    • Handle: RePEc:gde:journl:gde_v64_n2-3_p189-213
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    References listed on IDEAS

    as
    1. Anthony B. Atkinson & Andrea Brandolini, 2004. "I cambiamenti di lungo periodo nelle diseguaglianze di reddito nei paesi industrializzati," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 389-422.
    2. Francesca Gastaldi & Paolo Liberati, 2005. "The Personal Income Tax in Italy: Why Does It Change?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 159-188, November.
    3. Tito Boeri & Andrea Brandolini, 2004. "The Age of Discontent: Italian Households at the Beginning of the Decade," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(3-4), pages 449-487, December.
    4. James Meade., "undated". "Agathotopia," Hume Papers 16, David Hume Institute.
    5. Carlo V Fiorio & Francesco D'Amuri, 2005. "Workers' Tax Evasion in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 247-270, November.
    6. Robert Moffitt, 2002. "Milton Friedman, the Negative Income Tax, and the Evolution of US Welfare Policy," Economics Working Paper Archive 486, The Johns Hopkins University,Department of Economics.
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    Cited by:

    1. Massimo Baldini & Daniele Pacifico, 2009. "The Recent reforms of the Italian Personal Income Tax: Distributive and Efficiency Effects," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 191-218.

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    More about this item

    Keywords

    personal taxation; family benefits; social dividend and negative income tax;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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