Flat-tax and minimum income experiment in an OLG model of Italy

• Autor(a) principal: Scalabrin, Giacomo
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/29114
• topic: Domínio/Área Científica::Ciências Sociais::Economia e Gestão

In the light of the recent political events in Italy this paper aims to quantitatively analyze the impact of a Flat-Tax and minimum income based fiscal reform for different cohort ages in an Overlapping Generation (OLG) model with permanent labour productivity across agents and a stochastic labour income component. Two Computational Experiments are conducted: the former is a Flat-Tax only for the personal labour income, the latter involves the same marginal rate for personal labour and capital income. It results that to finance a minimum income measure in support of every citizen below the absolute poverty threshold, it is required a marginal rate of respectively 20% and 23%. The amount granted would be equal to the difference of the absolute poverty threshold (€780 in Italy) and the total income of the targeted citizen. The results of this study seem to reflect the forecasts of overall growth in the aggregate output and consumption of the economy: a deeper analysis show that actually the labour supplied and aggregate welfare decrease while the inequality considerably increases.