Counterfactual Assessment in the Design of Tax Reforms: model Decomposition of Revenue and Redistribution Effects

• BORJA GAMBAU SUELVES ^[1] ; NURIA BADENES PLÁ ^[2] ; JOSÉ M. LABEAGA ^[1]
  1. [1] Universidad Nacional de Educación a Distancia

     Universidad Nacional de Educación a Distancia

     Madrid, España

     
  2. [2] Instituto de Estudios Fiscales

     Instituto de Estudios Fiscales

     Madrid, España

     
• Localización: Hacienda Pública Española / Review of Public Economics, ISSN 0210-1173, Nº 245, 2023 (Ejemplar dedicado a: Special issue of the “Meeting on public economics 2022”), págs. 179-208
• Idioma: inglés
• DOI: 10.7866/HPE-RPE.23.2.7
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• Resumen

  • In this paper, we propose a methodology for the evaluation of tax reforms through the design of counterfactual scenarios using Euromod. For this purpose, we develop two theorical model decompositions to explain the differences in tax revenue collection and the redistributive impact. We provide empirical evidence by designing a tax reform in Spain based on the French personal income tax. The approach can explain the isolated causes of differences based on the contribution of the tax system design and the income distribution. This result could help determining whether policy recommendations should focus on pre-distribution or redistribution.

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