A Belgian flat income tax: effects on labour supply and income distribution (original) (raw)

What makes Personal Income Taxes progressive? The case of Belgium

2000

In this paper we investigate the progressivity impact of various components of the Belgian personal income tax system, before and after a major reform of this system. The reform reduced the top tax rates, broadened the tax base and increased tax credits. We show that, contrary to the opinion, commonly expressed in public debates, the reform did not reduce the liability progression of the system and that the rate structure is relatively unimportant in explaining progressivity.

Flat Tax in The SEE: Has It Reached The Peak?

The paper presents comparative analysis of flat tax systems in transition countries in the light of their departure from Hall-Rabushka model of flat tax. Main findings of some recent empirical research of effects of flat tax in the transition countries are presented. The second part of the paper analysis Hall-Rabushka roots of Croatian income tax and possible equity and efficiency effects of revenue neutral flat tax in that country using average and marginal income tax rates. Revenue neutral reform will probably lead to a rise in average tax rate for most of the incomes, except the highest ones and to the rise in already high total marginal effective tax rates (personal income tax rate + local surcharge + employee social security contributions) for lowest incomes. Combination of higher basic personal allowance with higher flat tax rate could lead to a negative efficiency effects.

Taxes and redistribution An international comparison

Titmuss already emphasised in the fifties that the Welfare State is not only shaped by social services and benefits, but also by the tax system, thereby introducing the term 'fiscal welfare'. Taxes affect social policy, as they influence the income distribution; more specifically they provide concessions for certain socially recognised needs, e.g. for the presence of children, and thus they fulfil the same aim as social benefits. In this paper we present an international comparison of the redistributive effect of personal income taxes in the countries of the EU and the OECD. We also focus on Belgium and its experience with the recent tax reform. In a first part we discuss the links between taxes and social policy. Next, we present the most important measures of the redistributive effect of taxes. In the third section we compare the redistributive effect of personal income taxes for various OECD countries. We present the contribution of progressivity and average tax rate to t...