Is the Belgian income tax system inefficient ? An inverted optimal taxation approach.

Details

Supervisors

Maniquet, François ; Pavoni, Nicola

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

The present thesis investigates the Pareto efficiency of Belgian labor income tax system. More precisely, we use the Saez (2002) model to retrieve social preferences from the existing tax-benefit system and we check whether the implicit marginal social welfare weights are positive along the income distribution. The estimation is run on a subpopulation of childless singles with a recent dataset for several relevant labour supply elasticity scenarios. The results suggest that either the labour income tax-benefit system is inefficient or participation elasticities are much smaller than what the literature has documented.