Accounting for Tax Evasion Profiles and Tax Expenditures in Microsimulation Modelling. The BETAMOD Model for Personal Income Taxes in Italy

Albarea, Andrea; Bernasconi, Michele; Novi, Cinzia Di; Marenzi, Anna; Rizzi, Dino; Zantomio, Francesca

doi:10.34196/ijm.00123

Cited by 8 publications

(23 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We use the misreporting estimates to scale the survey net incomes, which enter microsimulation analyses. These are conducted with a tax-benefit microsimulation called BETAMOD (Albarea et al, 2015). BETAMOD works iteratively through various steps.…”

confidence: 99%

See 1 more Smart Citation

Income Underreporting and Tax Evasion in Italy: Estimates and Distributional Effects

Albarea¹,

Bernasconi²,

Marenzi³

et al. 2019

Review of Income and Wealth

Self Cite

View full text Add to dashboard Cite

The paper estimates the extent of evasion of personal income tax (PIT) in Italy by integrating two methods that the literature has previously applied separately. The consumption‐based method introduced by Pissarides and Weber (1989) is used to estimate misreporting of income in micro data collected in the household IT‐SILC survey. We adopt an econometric specification close in spirit to that of Feldman and Slemrod (2007), which allows us to estimate income misreporting at different rates for different income sources. The misreporting estimates are then used in the discrepancy method to correct the incomes compared with administrative registered data. The comparison provides new estimates of evasion of personal income tax by type of income, region and income class. The estimates are used to improve microsimulation analyses of the distributional impact of tax evasion.

show abstract

confidence: 99%

“…It works through various steps and modules in an iterated process (see Figure 1). A full description of the model is in Albarea et al (2015).…”

Section: The Microsimulation Model Betamodmentioning

confidence: 99%

Income Underreporting and Tax Evasion in Italy: Estimates and Distributional Effects

Albarea¹,

Bernasconi²,

Marenzi³

et al. 2019

Review of Income and Wealth

Self Cite

View full text Add to dashboard Cite

show abstract

“…Turning to international comparison, several studies provide estimates of evasion in selfemployment incomes fluctuating around 30 per cent. Similarly, high rates of under-reporting have been found, for example, among small informal business suppliers in the USA (Black et al, 2012), in self-reported incomes in Denmark (Kleven et al, 2011) or in self-employment incomes in Italy (Albarea et al, 2015). The 88 per cent compliance rate obtained here for 2001 (baseline equation) is situated in the upper range of available estimates, signalling again that it is an upper bound (the results of these other studies are not relative to labour's compliance) [20].…”

Section: Income Concealment By Sourcementioning

confidence: 90%

Inequality in tax evasion: the case of the Spanish income tax

Hetland

2020

AEA

View full text Add to dashboard Cite

Purpose The purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach The approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income but introduces two methodological innovations, which could be useful for further studies: correction for sample selection with a Heckman two-step setting and the calculation of different evasion rates for top incomes with an interaction term. Findings Evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 per cent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 per cent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 per cent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should, therefore, be revised upwards. Originality/value This is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.

show abstract

“…Hence, by allowing unskilled workers to supplement their little income, tax evasion improves equality and makes the PIT more progressive. Of course, this opens the issue of potential horizontal inequities and reranking effects that might arise between tax evaders and fully compliant taxpayers (see also Albarea et al 2015, on this point). The impact on the relative role of tax deductions, tax credits, and the marginal rate schedule is more difficult to identify and rests on the characteristics of tax evaders in the bottom deciles.…”

Section: Assessing the Pit Redistributive Effectmentioning

confidence: 99%

What Explains the Redistribution Achieved by the Italian Personal Income Tax? Evidence from Administrative Data

Barbetta

Pellegrino

Turati

2016

Public Finance Review

View full text Add to dashboard Cite

We analyze the Italian personal income tax (PIT) in the light of the different tools available to the government to achieve income redistribution. We focus in particular on three mechanisms: marginal tax rates, deductions, and tax credits. Exploiting an extended version of the standard Pfähler decomposition, we estimate the contribution of each of these three tools to the overall redistributive effect of the PIT using administrative data on more than 1.3 million individual tax returns. Our estimates suggest that more than half of the total PIT redistributive effect is due to the two most important tax credits (the tax credit for employment and the tax credit for retirement income), while the marginal rates schedule contribution is about 40 percent. On the contrary, most of the itemized expenditures do not show any sizable impact on redistribution.

show abstract

Accounting for Tax Evasion Profiles and Tax Expenditures in Microsimulation Modelling. The BETAMOD Model for Personal Income Taxes in Italy

Cited by 8 publications

References 0 publications

Income Underreporting and Tax Evasion in Italy: Estimates and Distributional Effects

Income Underreporting and Tax Evasion in Italy: Estimates and Distributional Effects

Inequality in tax evasion: the case of the Spanish income tax

What Explains the Redistribution Achieved by the Italian Personal Income Tax? Evidence from Administrative Data

Contact Info

Product

Resources

About