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Individual Vs Family Taxation: An Analysis Using Tabeita04

Econpubblica Working Paper No. 118

30 Pages Posted: 6 Feb 2009  

Marco Cavalli

Bocconi University

Carlo V. Fiorio

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche

Date Written: December 5, 2006

Abstract

In this paper we analyze whether Italian families, and especially those with children, would benefit from a tax system defined on a family rather than an individual tax unit. This analysis is performed using TABEITA04, the tax-benefit microsimulation model developed at Econpubblica on a representative sample of 2004 Italian households.

Results show that family with kids would, on average, lose from such a reform as they are better off with the actual individual tax system, which provides generous tax credits for family burdens. The simulated reform could also be extremely costly in terms of labor force participation of spouses: in our sample, over 80% of spouses are not working and nearly 40% of them would face an increased marginal tax rate if the family tax unit was introduced. Those benefiting the most would be couples without children where both spouses are working, who are not enjoying any tax credit in the current tax system.

Suggested Citation

Cavalli, Marco and Fiorio, Carlo V., Individual Vs Family Taxation: An Analysis Using Tabeita04 (December 5, 2006). Econpubblica Working Paper No. 118. Available at SSRN: https://ssrn.com/abstract=1338110 or http://dx.doi.org/10.2139/ssrn.1338110

Marco Cavalli (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Carlo Fiorio

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche ( email )

via Conservatorio 7
Milano, 20122
Italy

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