Declich C., Polin V. (2007).

Individuo e famiglia: quale fisco?. Rivista di Diritto Finanziario e Scienza delle Finanze, vol. 66, n. 2, pp. 149-201



As a consequence of the personal income taxation reform enacted through the 2003-5 Budget Laws, the topic of family tax-treatment has been in Italy focus of major debates in both the academic and the political arenas. This paper aims to examine the effects of joint taxation on horizontal equity in the Italian tax system. First, we analyze theoretical assumptions by taking into consideration the choice of tax unit, the cost of dependents children and spouse (when feasible), and the fiscal tools aimed at adjusting tax burden (according to the household size and/or the number of primary income earners). Second, we estimate the distribution and revenue implications of adopting various joint taxation systems; this would provide us with an opportunity to discuss issues related to the overall cost-benefit analysis and the evaluation of horizontal equity and efficiency. By using data from the Bank of Italy’s Survey of Income and Wealth for Italian Households for 2000, we provide estimates based on the ISAE micro-simulation model (ITAXMOD). Our findings show that a joint taxation system may contribute to reduce (and in some cases even eliminate) the heavier tax burden that households with only one earner suffer in comparison with those of same income level but with two-earners instead though, the consequences for households with dependent children can be more ambiguous. However, one can argue that a more favourable treatment for two-earners households can be related to the higher domestic and/or income production costs. Moreover, the cost of such a reform for public budget would be very high.