Developing a static microsimulation model for the analysis of housing taxation in Italy

Abstract

In this paper we develop the first (static) microsimulation model aimed at studying the distributive impact of housing taxation on Italian households. We use as input data those provided by the Bank of Italy from its Survey on Households Income and Wealth, and discuss specific problems arising in the evaluation of cadastral income and of the Property Tax base. Our estimates of the distribution of taxpayers are very close to the Ministry of Finance official statistics; hence, our model can be seen as a reliable tool to evaluate the current distribution of housing taxation and the impact of potential tax reforms. Our simulations suggest that both Property Tax and Waste Management Tax show a moderate regressive impact with respect to household gross income, whilst the Personal Income Tax on dwellings other than the main residence is progressive. We then provide an application of our model, to study the Property Tax reform in 2008. Our findings show that all households owning the main residence gain from the 2008 reform, but tax cuts are mostly concentrated on the top three deciles of household equivalent gross income, so that the richest benefit most.

On Measuring Inequity in Taxation Among Groups of Income Units

“…As the SHIW provides only information on each individual's PIT net income, we estimate the PIT gross income for each taxpayer. The model we employ is an updated version of the model described in Pellegrino et al (2011). Considering the income units, results concerning the gross income as well as tax liability distribution are very close to the Ministry of Economics and Finance's (2011) official statistics.…”

Personal Income Tax Reforms: A Genetic Algorithm Approach

“…To answer the above question we rely on a static micro-simulation model written in STATA (technical details are available in Pellegrino et al (2011)) that employs, as input data, those provided by the Bank of Italy in its Survey on Households' Income and Wealth published in 2012 with regard to the 2010 fiscal year. The results of this micro-simulation model are very close to the official statistics made available by the Italian Ministry of Economy and Finance for the 2010 fiscal year, so that this instrument is suitable for the type of empirical analysis we propose.…”

Microreg: a Traditional Tax-Benefit Microsimulation Model Extended to Indirect Taxes and In-Kind Transfers

“…According to our simulation about 52.3% of Italian taxpayers own a dwelling house (Table 2). Not surprisingly, as underlined also in Pellegrino et al (2011), the value is higher with respect to the one registered by the MEF since taxpayers, who use the "770" form do not have to declare the ownership of the main residence.…”