We calibrate and simulate an heterogeneous agents OLG model to assess the impact of several reforms in which the personal income tax in Italy is replaced by a flat tax possibly complemented with a deduction. We find that a flat tax is welfare improving (according to a utilitarian social welfare function) only for specific subgroups of the population and for low values of the deduction.
Flat tax reforms in Italy
Alessandro Sommacal
2020-01-01
Abstract
We calibrate and simulate an heterogeneous agents OLG model to assess the impact of several reforms in which the personal income tax in Italy is replaced by a flat tax possibly complemented with a deduction. We find that a flat tax is welfare improving (according to a utilitarian social welfare function) only for specific subgroups of the population and for low values of the deduction.
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