Informations and abstract
Keywords: Personal income taxation, Family allowances, Family quotient, Tax benefit system
In this paper reforms of both present Italian personal income taxation and family allowances are evaluated with the aim to make the tax benefit system able to better support family burden. Two kind of reforms are considered: family quotient, based on the change of the tax unit from persons to families, and a new generalized family allowance, based on equivalent income and absorbing current family tax credits and allowances. After an evaluation of some limits of family quotient (higher effective marginal tax rate for spouse with lower income and a reduced support for low income families) and the current mix of tax credits and allowances (families with higher equivalent income can receive higher support for family burden), the comparison among two specific reforms is performed using a microsimulation model built on Bank of Italy survey about the Italian household and personal incomes. Results shows that it is possible to shape quotient family based reforms with redistributive effects, but also that the new generalized family allowance here presented is able to better support bottom quintiles of population, with or without dependent children.