We provide a new and unexplored explanation of the relationship between the functional and personal distribution of income. By proposing a simple theoretical framework, we show that, in the noncomprehensive personal income tax (PIT) hypothesis (i.e., when some or all capital income items are excluded from the PIT base), the correlation between disposable and market income inequality depends on the labor share level, which may influence the overall effectiveness of the tax-benefit system in addition to the PIT progressivity. We test our hypothesis using panel data on 33 OECD countries from 2000 to 2017 and find that a 10-pp increase in labor share is related to a 0.06 reduction in the correlation between market and disposable income inequality. This significant result obtained after controlling for country and year fixed effects, country-specific linear trends, and several confounders capturing the characteristics of the tax-benefit system suggests that labor share may act as an "automatic stabilizer" of market income inequality. Relevant implications for tax policy concern the role of the PIT's base for the public budget's overall redistributive effect.

Nell’articolo vengono considerati i problemi fiscali internazionali posti dalla crescente digitalizzazione del sistema economico e dallo sviluppo di attivita e servizi la cui natura e prevalentemente o esclusivamente digitale. Vengono quindi esaminate le possibili basi imponibili alternative o integrative dell’imposta sul reddito delle societa e le iniziative intraprese dall’OECD e dall’Unione Europea dirette a riformare il sistema di tassazione internazionale dei redditi delle societa multinazionali e delle piattaforme digitali, fino al recentissimo Blueprint dell’OECD approvato dai paesi del G20 il 14 ottobre 2020.

Using panel data on 34 OECD countries followed from 2000 to 2015, we analyse the extent to which the labour share plays a role in mitigating the link between market and disposable income inequality in the non-comprehensive personal income tax hypothesis (i.e. when some or all capital income items are excluded from the personal income tax base). We find that one standard deviation increase of labour share is significantly related to a 9-percentage points reduction in the elasticity of disposable income inequality with respect to market income inequality. This important result obtained after controlling for country and year fixed effects, country-specific linear trends and several variables capturing the characteristics of the taxbenefit system in terms of overall progressivity, suggests that labour share could be considered as an “automatic stabilizer†of income inequality. Relevant implications for tax policy concern the role of the tax base of the personal income tax for the overall redistributive effect of the public budget.

Il saggio affronta il problema delle conseguenze distributive (e sul gettito) della discrepanza fra l’effettiva base imponibile dell’Irpef e quella proposta nel 1964 dalla Commissione per lo Studio della Riforma Tributaria (il reddito globale del contribuente) - ispirata al concetto di reddito entrata a la Schanz-Haig-Simons. Dal rapporto della Commissione e dagli scritti di Cosciani emerge come venisse ritenuto essenziale per la realizzazione di un sistema tributario perequato l’inclusione nella base imponibile dell’imposta personale progressiva di tutti gli elementi di reddito. Tuttavia, l’Irpef nasce nel 1974 escludendo dalla base imponibile gli interessi - con un arretramento rispetto alla preesistente imposta complementare - ed il processo di erosione della base imponibile dell’Irpef e proseguito fino ad oggi, in particolare rispetto ai redditi di capitale. La parte finale del saggio presenta un calcolo del contributo dato dalle diverse tipologie di reddito alla base imponibile dell’Irpef in rapporto al Pil fra il 1980 e il 2012, ed una valutazione - utilizzando i dati delle dichiarazioni dei redditi relativi al 2010 -dell’effetto redistributivo che deriverebbe dall’inclusione nella base imponibile Irpef dei redditi delle attivita finanziarie attualmente soggetti a imposta sostitutiva.

This paper intends to provide an Introduction to this Special Issue devoted to analyse the tax reform proposed for Italy in 1964 by the Commission chaired by Cesare Cosciani, by supplying an overview of the pre-reform tax system, of the tax design envisaged by the Cosciani Commission and of the tax reform framework that was approved by the Italian Parliament in 1971. Questo saggio intende porsi come Introduzione a questo Numero Speciale dedicato all’analisi della riforma tributaria proposta in Italia nel 1964 dalla Commissione guidata da Cesare Cosciani, presentando una visione complessiva del sistema tributario italiano anteriore alla riforma, del progetto di riforma elaborato dalla Commissione Cosciani e della struttura del nuovo sistema tributario approvata dal Parlamento nel 1971.

The taxation of the owner-occupied house – the “principal dwelling†– was a recurrent central issue in the political and economic debate in Italy especially in the last 15 years. It may be useful, therefore, to address this issue, by both examining the theoretical aspects and reviewing the Italian legislation since the general tax reform of the seventies – whose starting point for direct taxation was the year 1974 – with respect to the two tax bases that can be used in the taxation of owner-occupied dwellings, namely the imputed income and the asset value. This paper first analyzes the tax treatment of principal dwellings in Italy on both equity and efficiency grounds over the past forty years and compares it with the solutions adopted in other countries; second an empirical assessment of the evolution of the total tax burden on owner-occupied houses in Italy is proposed.

This article analyzes the relationship between the mix of cash transfers and in-kind goods provided by local governments and the local population size and individual preferences. On theoretical grounds, the traditional theory of fiscal federalism and recent contributions on both the local jurisdictions and the breaking up of nations assume that (subcentral) governments provide a single public good, ignoring expenditure composition. However, central and local governments provide both cash and in-kind goods. We propose a simple theoretical model assuming that local governments provide a composite good, formed by money transfers and in-kind services, and that preferences vary across population due to different individual income levels. Normative and positive outcomes are derived and compared assuming a centrally determined expenditure ceiling. Measures designed to move the actual policy mix closer to the optimal one are envisaged. A scenario characterized by a fully decentralized two-step decision process is also analyzed.

The proper size of local jurisdictions is one of the problems the economic theory of fiscal federalism deals with. On theoretical grounds, the economic literature identifies the benefits and costs of larger vs. smaller jurisdictions mainly in economies of scale and differences in population preferences, respectively. Gains and losses due to the tax-transfer mechanism are often also considered. In practice, any decentralised country may face the two opposite phenomena of small jurisdictions merging to found a larger one and/or the communities belonging to a single political-administrative unit separating so as to give rise to two (or more) smaller jurisdictions. In this paper the latter case is analysed with special reference to the possible splitting of the Italian province of Reggio Calabria and the founding of a new province in its eastern part. The mentioned approaches are jointly used so as to provide a unitary cost-benefit evaluation. Firstly, the efficiency gains and losses from the province splitting are considered. By using indicators of the population income, wealth and consumption, of demographic and education composition and of political opinions, the gains in preference homogeneity are tested also through the cluster methodology and a spatial analysis. Then the economies of scale are analysed with respect to the administrative offices, and the additional political and bureaucratic costs are inferred using data from the mother-province budget. Finally, an analysis of financial sustainability of the new province is accomplished, through a simulation of its budget and the calculation of fiscal and financial indicators. While no gains in terms of better correspondence of the new province decisions to local preferences may be hypothesized as a consequence of the separation from the old province, higher costs due to the doubling of political and administrative apparatus and a worsening of fiscal and financial situations should be expected. The well known result that the secession from large jurisdictions comes out in net losses for poorer areas appears to be confirmed.

This paper aims at analysing the population size of local jurisdictions with respect to the characteristics of the goods they provide to their citizens. The economic analysis on the size of government units is mainly founded on the classical fiscal federalism literature (Tiebout, 1956; Buchanan, 1965; Olson, 1969; Oates, 1972) and on the more recent stream on the breaking-up of nations (Alesina and Spolaore, 1997; Bolton and Roland, 1997; Spolaore, 2005). We propose a theoretical framework to further develop the analyses accomplished in the mentioned studies. In particular, we build a model that takes into account the possibly different characteristics of local public expenditures, in terms of both the mix of cash and in- kind components and the degree of "rivalness" of the goods and services supplied by local governments. We show that these factors may influence the optimal size of local units. Some conclusions about which level of government should perform any specific mix of public functions, in order to maximize individuals' welfare, are also drawn.

Due to its low level of business expenditure on R&D (berd), Italy is urged to adopt fiscal incentives to R&D, like most oecd countries. This paper proposes the introduction of a permanent tax credit that ranges between 15% and 52% of total berd. Estimates show that this policy should foster R&D business expenditure by generating an annual growth that falls within a range of 5-15% letting the berd to gdp ratio to rise from the current 0.5% to a maximum of a 1.3% within 5 years.

In Italy, the Regular Grant is the most important subsidy to private cultural institutions. Since 1996, law 534/96 has regulated its provision. This law greatly improves on the previous legislation, as it redefines the prerequisites to become a recipient and specifies performance indicators to which the size of the grant must be tied. This paper examines the effects of the introduction of the new law, the characteristics of the government choice process and the redistribution profile of these grants using a variety of estimating techniques on official data gathered for the purpose.

Many non-profit organizations engage in bothcharitable and purely commercial activities, whereprofits from the latter are used to finance theformer. Should business income be tax-exempted becauseof its cross-subsidization function? The effects ofexemption on the product mix are analysed, using amodel incorporating managerial discretion – acrucially different assumption from that of thecurrent literature. Under given assumptions,tax-exemption of commercial income emerges as a lessefficient means of supporting the charitable productthan alternative Government measures, such as anoutput subsidy.

This paper is concerned with the economic analysis of the European rules on the circulation of works of art. After reviewing the relevant literature, an economic framework of the international circulation of works of art is provided (social goals, efficiency and distributive aspects, an economic rationale for a general free trade rule integrated by selective protectionism). Using this framework the European system of circulation of works of art—resulting from the combination of the Maastricht Treaty with Regulation 3911/92 and Directive 93/7—is analysed. The main results of the analysis are: 1) the general free trade principle ruling the Single European Market is strongly limited by rules protecting national artistic heritages of member states; 2) this protectionism—working towards countries both outside and inside the European Union—is applied according to the national laws of each member state, while, contrary to what the Maastricht Treaty would call for, an artistic heritage of European significance is not defined and no autonomous role is recognized in this field to European Institutions; 3) this system shows some inconsistencies with economic theory, as strict limits to trade are not provided when they should be required by the preservation of the physical or artistic integrity of works of art, while in other cases an unduly restrained trade may derive from highly protectionist national laws and export-licencing policies of member states. Enforcement provisions are also analysed and some proposals to improve the system are advanced.

Two streams of economic analysis are linked together: the tax-labor supply and the true tax-perceived tax relations. Data from interviews to a sample of workers show that only 23 percent of the respondents claim that the income tax affected their overtime behavior (16 percent once the unreliable claims are excluded), with the incentive effect slightly prevailing. There comes out a significant relation between the respondents' claims that the tax induced them to work more overtime and the particularly high (and largely overestimated) average tax rate they believe to bear. The tax information appears generally poor and sticky.