Personal income tax reforms: A genetic algorithm approach

Morini, Matteo; Pellegrino, Simone

doi:10.1016/j.ejor.2016.07.059

Cited by 22 publications

(22 citation statements)

References 27 publications

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“…As the information on income tax expenditure in household survey data is underestimated to a certain extent , this information is the result of back-extrapolation based on post-tax disposable income and income tax rules in the model. This method has also been used in similar studies (Immervoll and O'Donoghue, 2001;Morini and Pellegrino, 2018). Because PIT expenditure is calculated based on PIT rules, the impact of tax collection and management is omitted here and only the impact of the PIT system on residents' income redistribution is considered.…”

Section: Model and Datamentioning

confidence: 99%

Personal Income Tax Reform in China in 2018 and Its Impact on Income Distribution

Zhan

Shi

2019

China and World Economy

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In the context of personal income tax (PIT) reform in China in 2018, this paper examines some of the major issues of concern regarding the reform and income distribution. Using the China Personal Income Tax Micro-simulation model, the paper compares the differences between the 2011 and 2018 PIT systems, and finds that residents relying on different income sources may face a large degree of real tax rate change. Once the tax system is altered to PIT 2018, the coverage of PIT for wage earners will decrease from 46.9 to 23.4 percent, the income redistributive effect will drop from 1.95 to 1.22 percent and the PIT's role in fiscal revenue will also be negatively affected. Nevertheless, if individual income continues to grow, the share of PIT in fiscalrevenue is expected to return to the 2018 level in 2022, but its income redistribution function is difficult to recover in the short term. The paper finds that the effect of PIT on income distribution depends on the tax structure. Gradual transition to an "entirely comprehensive" tax system when conditions are appropriate will achieve better income redistribution results at a lower average tax rate.

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Section: Model and Datamentioning

confidence: 99%

Personal Income Tax Reform in China in 2018 and Its Impact on Income Distribution

Zhan

Shi

2019

China and World Economy

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“…This means in particular that tax reforms must balance the various trade-offs that necessarily and inevitably exist between the need to generate revenues but to do so in an efficient and a fair way" [18]. In this respect, Morini and Pellegrino [7] underline that " . .…”

Section: Pit Policies and Their Evaluationmentioning

confidence: 99%

“…Here we employ the micro-simulation model module concerning the PIT updated to the 2014 fiscal year. Technical details regarding the structure of previous versions of this microsimulation model and its applications to the analysis of the Italian PIT and the analysis of inequality indexes decompositions can be found in Pellegrino et al [26], Morini and Pellegrino [7], Vernizzi and Pellegrino [27] and Monti et al [28].…”

Section: The Data and The Micro-simulation Modelmentioning

confidence: 99%

“…Our methodology exploits an evolutionary algorithm, as such heuristics approaches have been demonstrated well suited to tackle complex real-world scenarios [4,5,6]. We then compare our results both with the effect of the reform recently implemented by the Italian government, and the one estimated in the article by Morini and Pellegrino [7], which is also based on an evolutionary algorithm framework.…”

Section: Introductionmentioning

confidence: 97%

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Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

2018

Self Cite

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In this paper we propose a multi-objective evolutionary algorithm for supporting the definition of a personal income tax reform. As a case study, we apply this methodology to the Italian income tax, and consider a recently implemented tax cut. Our optimization algorithm is able to determine a set of tax structures that maximize the redistributive effect of the tax while minimizing its inefficiency-considering for the former the Reynolds-Smolensky index and for the latter the weighted average of taxpayers' effective marginal tax rates. The approach also takes into account two additional factors: the tax has to guarantee a specific revenue and to minimize the share of losing taxpayers with respect to the pre-reform situation. Experimental results clearly demonstrate that the methodology we employ can support the policy-maker's decisions in complex, realworld situations.

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“…The SHIW provides information on each individual's Personal Income Tax net income, but does not contain the corresponding gross income. We employ an updated version of the microsimulation model described inMorini and Pellegrino (2016) to estimate the latter for each taxpayer. A comparison of the results from the microsimulation model with the official statistics published by the Italian Ministry of Finance (2016) shows that the distribution of gross income and of net tax, according to bands of gross income and type of employment, are close to each other.…”

mentioning

confidence: 99%

Inferential results for a new measure of inequality

Davydov

Greselin

2019

The Econometrics Journal

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In this paper we derive inferential results for a new index of inequality, specifically defined for capturing significant changes observed both in the left and in the right tail of the income distributions. The latter shifts are an apparent fact for many countries like US, Germany, UK, and France in the last decades, and are a concern for many policy makers. We propose two empirical estimators for the index, and show that they are asymptotically equivalent. Afterwards, we adopt one estimator and prove its consistency and asymptotic normality. Finally we introduce an empirical estimator for its variance and provide conditions to show its convergence to the finite theoretical value. An analysis of real data on net income from the Bank of Italy Survey of Income and Wealth is also presented, on the base of the obtained inferential results.

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Personal income tax reforms: A genetic algorithm approach

Cited by 22 publications

References 27 publications

Personal Income Tax Reform in China in 2018 and Its Impact on Income Distribution

Personal Income Tax Reform in China in 2018 and Its Impact on Income Distribution

Balancing the equity-efficiency trade-off in personal income taxation: an evolutionary approach

Inferential results for a new measure of inequality

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