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EnglishThe presence of extensive housing subsidies characterises the current Italian tax system as inefficient. In this paper, we study whether inefficiency is the price to be paid to improve equity, by assessing the distributive impact of housing taxation on households’ wellbeing. We concentrate on the Personal Income Tax (PIT) on the main residence, and compare current provisions of the Tax Code with alternative approaches which consider the imputed rent (IR) from owner-occupied dwellings, and would make the tax system neutral with respect to the allocation of wealth among different assets. Holding revenues constant at the current level, we assess the distributional consequences of the IR approach in terms of several alternative scenarios. Our results suggest that the current tax system is as inefficient as it is inequitable. In particular, by including IR from owner-occupied dwellings as a component of the PIT gross income, we find that overall, inequality is reduced, while contemporaneously increasing efficiency in the allocation of wealth. Moreover, considering changes in tax liabilities for individual taxpayers, we show that taxing imputed rents will favour the young and penalise the elderly.
| Titolo: | Assessing the Distributional Effects of Housing Taxation in Italy: A Microsimulation Approach |
| Autori Riconosciuti: | |
| Autori: | Pellegrino S.; Piacenza M.; Turati G. |
| Data di pubblicazione: | 2012 |
| Abstract: | The presence of extensive housing subsidies characterises the current Italian tax system as inefficient. In this paper, we study whether inefficiency is the price to be paid to improve equity, by assessing the distributive impact of housing taxation on households’ wellbeing. We concentrate on the Personal Income Tax (PIT) on the main residence, and compare current provisions of the Tax Code with alternative approaches which consider the imputed rent (IR) from owner-occupied dwellings, and would make the tax system neutral with respect to the allocation of wealth among different assets. Holding revenues constant at the current level, we assess the distributional consequences of the IR approach in terms of several alternative scenarios. Our results suggest that the current tax system is as inefficient as it is inequitable. In particular, by including IR from owner-occupied dwellings as a component of the PIT gross income, we find that overall, inequality is reduced, while contemporaneously increasing efficiency in the allocation of wealth. Moreover, considering changes in tax liabilities for individual taxpayers, we show that taxing imputed rents will favour the young and penalise the elderly. |
| Volume: | 58 |
| Fascicolo: | 3 |
| Pagina iniziale: | 495 |
| Pagina finale: | 524 |
| Digital Object Identifier (DOI): | 10.1093/cesifo/ifs004 |
| Parole Chiave: | Housing taxation; Imputed rent; Personal Income Tax; Microsimulation models |
| Rivista: | CESIFO ECONOMIC STUDIES |
| Appare nelle tipologie: | 03A-Articolo su Rivista |
File in questo prodotto:
| File | Descrizione | Tipologia | Licenza | |
|---|---|---|---|---|
| CESifo ES_PPT_2012_postprint.pdf | POSTPRINT (VERSIONE FINALE DELL’AUTORE) | Accesso aperto | Open Access Visualizza/Apri | |
| CESifo ES_PPT_vol. 58(3).pdf | PDF EDITORIALE | Accesso riservato | Utenti riconosciuti Richiedi una copia |
http://hdl.handle.net/2318/102332
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