Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/286522 
Year of Publication: 
2020
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 11 [Issue:] 4 [Year:] 2020 [Pages:] 407-455
Publisher: 
Springer, Heidelberg
Abstract: 
Is the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.
Subjects: 
Income tax
Progressivity
Inequality
Income and wealth distribution
General equilibrium
Heterogeneous agents
JEL: 
D31
C68
E62
H21
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size
713.62 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.