Taxes and redistribution An international comparison (original) (raw)

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...

The fiscal and equity impact of social tax expenditures in the EU

Journal of European Social Policy

Tax expenditures (TEs) are preferential tax treatments granted to specific individuals or categories of households, with the aim of achieving social and economic goals. They are widely used by EU Member States. However, their fiscal and equity impacts are not always clear and their effectiveness and efficiency as a policy instrument need to be carefully evaluated, especially in the present context of constrained public finances. This article quantifies the fiscal and equity effects of social TEs related to housing, education and health in 28 European countries making use of EUROMOD, the EU-wide microsimulation model. We find a variety of effects, in terms of sign and magnitude, across Member States, and within these, among types of households. Overall, our findings suggest that the impact of TE on tax revenues and on income inequalities can be sizable. The redistributive impact of removing TEs can go in both directions, either on the progressive or regressive side, depending on the ...

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