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Income taxation and equity: new dominance criteria with a microsimulation application

Author

Listed:
  • Paolo Brunori

    (London School of Economics
    University of Florence)

  • Flaviana Palmisano

    (Sapienza University of Rome)

  • Vito Peragine

    (University of Bari)

Abstract

This paper addresses the problem of the normative evaluation of income tax systems and income tax reforms. While most of the existing criteria, framed in the utilitarian tradition, are uniquely based on information about individual incomes, this paper, building upon the opportunity egalitarian theory, proposes new equity criteria which take into account also the socio-economic characteristics of individuals. Suitable dominance conditions that can be used to rank alternative tax systems are derived by means of an axiomatic approach. Moreover, the theoretical results are used to assess the redistributive effects of an hypothetical tax reform in Romania through a microsimulation analysis.

Suggested Citation

  • Paolo Brunori & Flaviana Palmisano & Vito Peragine, 2022. "Income taxation and equity: new dominance criteria with a microsimulation application," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 509-536, September.
    • Handle: RePEc:spr:joecin:v:20:y:2022:i:3:d:10.1007_s10888-022-09537-7
    DOI: 10.1007/s10888-022-09537-7
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    More about this item

    Keywords

    Income inequality; Inequality of opportunity; Tax reforms; Microsimulation; Progressivity; Horizontal equity;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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