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The Distributional Effects of Taxes and Transfers Under Alternative Income Concepts: The Importance of Three “I”s

Figari, F and Paulus, A (2015) 'The Distributional Effects of Taxes and Transfers Under Alternative Income Concepts: The Importance of Three “I”s.' Public Finance Review, 43 (3). 347 - 372. ISSN 1091-1421

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Abstract

© The Author(s) 2013 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.

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HJ Public Finance
Divisions: Faculty of Social Sciences > Institute for Social and Economic Research
Depositing User: Jim Jamieson
Date Deposited: 06 May 2014 11:46
Last Modified: 23 Jan 2019 05:16
URI: http://repository.essex.ac.uk/id/eprint/8695

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