Speaker: Emanuela Struffolino (University of Milan)
Abstract
Previous research acknowledged the importance of taxes together with benefits in reducing poverty and inequality. So far, little attention has been paid to the fact that even a progressive tax and transfer system can hurt the poor. Building on prior work looking at the effect of taxation on household poverty in developing countries and subnational contexts, this article considers how the income taxes most rich countries rely on to finance the public sector in many instances also serves to exacerbate and create household poverty. Fiscal impoverishment’s level is measured as the share of the population with higher market than disposable income but disposable income below the poverty line (Lustig and Higgins 2016), i.e., the percentage of individuals who are made poor or poorer as a result of income taxation. We describe trends in fiscal impoverishment over time and across geographical macro-areas in Italy. We use the European tax-benefit model EUROMOD and the Italian module of the EU-SILC data from 2005 to 2019 and rely on the ISTAT absolute poverty threshold for 38 household constellations based on the number and the age of the components depending on their geographical area of residence.