Scandinavian Working Papers in Economics
Discussion Papers,
Statistics Norway, Research Department
No 171: Welfare Effects of Proportional Taxation: Empirical Evidence from Italy, Norway and Sweden
Rolf Aaberge, Ugo Colombino and Steinar Strøm ()
Additional contact information
Steinar Strøm: Statistics Norway
Abstract: This paper employs a particular labor supply model to examine the welfare effects from replacing current tax systems in Italy, Norway and Sweden by proportional taxation on labor income. The results show that there are high efficiency costs for Norway and low costs for Italy and Sweden associated with the current progressive labor income taxes. However, there appears to be large variation in the distribution of welfare gains/losses. "Rich" households - defined by their pre-tax-reform income - tend to benefit more than "poor" households from replacing the current progressive tax systems by proportional taxation.
Keywords: Labor supply; taxation; distribution of income and welfare.
JEL-codes: H23; H31; J22 April 1996
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