Tax Reform, Delocation, and Heterogeneous Firms*

Is the Italian Corporate Tax Reform Going to Reduce Firms’ Tax Burden? a Microsimulation Analysis

This paper analyses the impact of the corporate tax reform introduced in Italy at the beginning of 2004 on firms’ tax burden. For this purpose we develop a microsimulation model reproducing the Italian corporate tax system. The model is based on an integrated dataset combining ISTAT (Italian National Statistical Office) survey data and published accounts data for corporations, for the year 2000...

Tax Reform and Poverty

The tax system has a pervasive impact on poverty, both directly through its role in the distribution of society’s resources and indirectly through its effects on the incentives for economic decisions like working and saving. The two most important facets of the tax system for low-income families are payroll taxes and the Earned Income Tax Credit (EITC), the former of which levies a tax on earne...

Tax Reform and Automatic Stabilization

A fundamental property of a progressive income tax is that it provides implicit collective insurance against idiosyncratic shocks to income by dampening the variability of disposable income and consumption. The Economic Recovery Tax Act of 1981 (ERTA) and the Tax Reform Act of 1986 (TRA86) greatly reduced the number of marginal tax brackets and the maximum marginal rate, which limits the abilit...

Evaluating International Tax Reform

This paper introduces “capital ownership neutrality” (CON) and “national ownership neutrality” (NON) as benchmarks for evaluating the desirability of international tax reforms, and applies them to analyze recent U.S. tax reform proposals. Tax systems satisfy CON if they do not distort the ownership of capital assets, which promotes global efficiency whenever the productivity of an investment di...

Tax Competition with and without Tax Discrimination against Domestic Firms