Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23275
Authors: 
Peichl, Andreas
Paulus, Alari
Year of Publication: 
2007
Series/Report no.: 
Finanzwissenschaftliche Diskussionsbeiträge / Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln 08-4
Abstract: 
The flat income tax has become increasingly popular recently, yet its implementation is limited to Eastern Europe. We analyse the distributional and e? ciency effects of flat tax scenarios for Western European countries. Our simulations show that flat tax rates required to attain revenue neutrality with existing basic allowances improve labour supply incentives. However, they result in higher inequality and polarisation. Flat rates necessary to keep the inequality levels unchanged allow for some scope for flat taxes to increase both equity and e? ciency. Our analysis suggests that Mediterranean countries are more likely to benefit from flat taxes.
Subjects: 
Flat tax reform
income distribution
work incentives
microsimulation
JEL: 
H24
D31
C81
Document Type: 
Working Paper

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