TY - JOUR
T1 - The Distributional Effects of Taxes and Transfers Under Alternative Income Concepts
T2 - The Importance of Three “I”s
AU - Figari, Francesco
AU - Paulus, Alari
N1 - Publisher Copyright:
© The Author(s) 2013
PY - 2015/5/9
Y1 - 2015/5/9
N2 - This article investigates how the distribution of income changes when the standard disposable income (DI) is replaced by an extended income (EI) concept that includes the three “I”s: indirect taxes, imputed rent, and in-kind benefits. Second, it assesses the distributional effects of the main types of tax-benefit instruments under different income concepts. The analysis covers three European countries (Belgium, Greece, and the United Kingdom) characterized by substantially different tax-benefit systems. The overall redistributive effect of the tax-benefit systems depends heavily on the income concept considered and the differences across countries are smaller when considering the EI. Moreover, the common use of a narrower income concept, such as the DI, can lead to the overestimation of the redistributive effect of the cash tax-benefit instruments (in relative terms), the extent of this varying across countries, due to the size and distribution of three “I”s and the adoption of the needs-adjusted equivalence scale.
AB - This article investigates how the distribution of income changes when the standard disposable income (DI) is replaced by an extended income (EI) concept that includes the three “I”s: indirect taxes, imputed rent, and in-kind benefits. Second, it assesses the distributional effects of the main types of tax-benefit instruments under different income concepts. The analysis covers three European countries (Belgium, Greece, and the United Kingdom) characterized by substantially different tax-benefit systems. The overall redistributive effect of the tax-benefit systems depends heavily on the income concept considered and the differences across countries are smaller when considering the EI. Moreover, the common use of a narrower income concept, such as the DI, can lead to the overestimation of the redistributive effect of the cash tax-benefit instruments (in relative terms), the extent of this varying across countries, due to the size and distribution of three “I”s and the adoption of the needs-adjusted equivalence scale.
KW - EUROMOD
KW - household income
KW - imputed rent
KW - in-kind benefits
KW - indirect taxes
UR - http://www.scopus.com/inward/record.url?scp=84926428659&partnerID=8YFLogxK
U2 - 10.1177/1091142113506930
DO - 10.1177/1091142113506930
M3 - Article
SN - 1091-1421
VL - 43
SP - 347
EP - 372
JO - Public Finance Review
JF - Public Finance Review
IS - 3
ER -