4th International conference on social aspects of Market Economy

According to Kakwani and Lambert (1998), an equitable income tax should respect three axioms related to each taxpayer’s tax liability, average tax rate and post-tax income: whenever taxation determines unequal tax treatments among equals or modifies pre-tax ordering, it influences the potential vertical effect of the tax through three types of inequity. Following the authors’ measurement system, we investigate axiom violations due to the 2007 Italian personal income tax reform. Our microsimulation model uses as input data those provided by the Bank of Italy in its Survey on Households Income and Wealth in the year 2008; estimates of the distribution of taxpayers are very close to the Ministry of Finance official statistics. The analysis focuses redistributive effects and re-rankings relations between different family types. Moreover we suggests an alternative way to measure violations of Kakwani and Lambert’s Axiom 2