Dynamic Scoring of Tax Reforms in the European Union

63 Pages Posted: 14 Sep 2018

See all articles by Salvador Barrios

Salvador Barrios

European Commission, JRC - IPTS

Mathias Dolls

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; IZA Institute of Labor Economics

Anamaria Maftei

European Commission - JRC

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research; University of Mannheim - School of Economics (VWL); IZA Institute of Labor Economics; University of Essex - Institute for Social and Economic Research (ISER)

Sara Riscado

Independent

Janos Varga

Independent

Christian Wittneben

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2017

Abstract

In this paper, we present the first dynamic scoring exercise linking a multi‐country microsimulation and DSGE models for all countries of the European Union. We illustrate our novel methodology analysing a hypothetical tax reform for Belgium. We then evaluate real tax reforms in Italy and Poland. Our approach takes into account the feedback effects resulting from adjustments in the labor market and the economy‐wide reaction to the tax policy changes. Our results suggest that accounting for the behavioral reaction and macroeconomic feedback to tax policy changes enriches the tax reforms' analysis, by increasing the accuracy of the direct fiscal and distributional impact assessment provided by the microsimulation model for the tax reforms considered. Our results are in line with previous dynamic scoring exercises, showing that most tax reforms entail relatively smaller feedback effects in terms of the labor tax revenues for tax cuts benefiting workers, compared with the ones granted to firms.

Keywords: dynamic scoring, taxation, revenue estimation, European Union

JEL Classification: H2

Suggested Citation

Barrios, Salvador and Dolls, Mathias and Maftei, Anamaria and Peichl, Andreas and Riscado, Sara and Varga, Janos and Wittneben, Christian, Dynamic Scoring of Tax Reforms in the European Union (March 1, 2017). ZEW - Centre for European Economic Research Discussion Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=2938993 or http://dx.doi.org/10.2139/ssrn.2938993

Salvador Barrios (Contact Author)

European Commission, JRC - IPTS ( email )

Edificio Expo
C/ Inca Garcilaso s/n
Seville, 41092
Spain
34 954 48 82 08 (Phone)
34 954 48 82 08 (Fax)

Mathias Dolls

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

HOME PAGE: http://www.cesifo-group.de/ifoHome/CESifo-Group/ifo/ifo-Mitarbeiter/cvifo-dolls_m.html

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Anamaria Maftei

European Commission - JRC ( email )

Spain

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim - School of Economics (VWL) ( email )

Mannheim 68131
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex - Institute for Social and Economic Research (ISER)

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Sara Riscado

Independent ( email )

Janos Varga

Independent ( email )

Christian Wittneben

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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