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on Public Finance |
| By: | Olivier Bargain (School of Economics, Univeristy College Dublin, CHILD & IZA Bonn); Tim Callan (ESRI) |
| Abstract: | To assess the impact of tax-bene?t policy changes on income distribution over time, we suggest a methodology based on counterfactual simulations. We start by decomposing changes in inequal- ity/poverty indices into three contributions: reforms of the tax-bene?t structure (rules, rates, etc.), changes in nominal levels of market incomes and tax-bene?t parameters (bene?t amounts, tax bands, etc.), and all other changes in the underlying population (market income inequality, demographic composition, employment level, etc.). Then, the decomposition helps to extract an absolute measure of the impact of tax-bene?t changes on inequality when evaluated against a distributionally-neutral benchmark, i.e. a situation where tax-bene?t parameters are adjusted in line with income growth. We apply this measure to assess recent policy changes in twelve European countries. Finally, the full decomposition allows quantifying the relative role of policy changes compared to all other fac- tors. We provide an illustration on France and Ireland and check the sensitivity of the results to the decomposition order. |
| Keywords: | tax-benefit policy, inequality, poverty, decomposition, microsimulation |
| JEL: | H23 H53 I32 |
| Date: | 2007–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:200728&r=pub |
| By: | Alari Paulus (Institute for Social and Economic Research); Andreas Peichl (University of Cologne) |
| Abstract: | The flat income tax has become increasingly popular recently, yet its implementation is limited to Eastern Europe. We analyse the distributional and efficiency effects of flat tax scenarios for Western European countries. Our simulations show that flat tax rates required to attain revenue neutrality with existing basic allowances improve labour supply incentives. However, they result in higher inequality and polarisation. Flat rates necessary to keep the inequality levels unchanged allow for some scope for flat taxes to increase both equity and efficiency. Our analysis suggests that Mediterranean countries are more likely to benefit from flat taxes. |
| Keywords: | flat tax, income inequality, microsimulation, tax reform |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2008-06&r=pub |
| By: | Francesco Figari (Institute for Social and Economic Research); Herwig Immervoll (Organisation for Economic Co-operation and Development); Horacio Levy (European Centre for Social Welfare Policy and Research); Holly Sutherland (Institute for Social and Economic Research) |
| Abstract: | In spite of there being few elements of tax or cash benefit systems in developed countries that are any longer explicitly gender-biased in a discriminatory sense, it is well recognised that they have significant gender effects. To the extent that women earn less than men on average under tax-benefit systems that are progressive, there is some redistribution from men to women overall. However, an aggregate perspective is insufficient for understanding how earning opportunities and public policies affect living arrangements at the family level in general and the circumstances of men and women in particular. Arguably, it is within the household that a gendered division of labour is most relevant. It is difficult to observe how income and other resources get allocated within households. We can, however, observe the incomes brought into the household and to what extent taxes and benefits mitigate (or indeed exacerbate) any inequality of income between men and women. We explore the effects of tax and benefit systems on differences in income and in incentives to earn income between men and women within couples in a selection of the member countries of the European Union (EU) using EUROMOD, the EU tax-benefit microsimulation model. This comparative perspective allows us to establish the relative effects of different policy regimes, given the underlying characteristics of each national population, using a consistent approach and set of incidence assumptions across countries. |
| Keywords: | europe, gender, inequality, taxation |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2007-28&r=pub |