Capacidad de pago y residtribución en el IRPF: tres nuevas perspectivas de análisis

Abstract

This doctoral dissertation focuses on how tax systems are designed according to the principle of distributive justice. More precisely, it aims at examining how well the personal income tax performs to achieve that goal. This issue has attracted great attention from the theory of Public Finance. Recently, The Mirrlees Review gives great relevance to redistributive aims in the design of tax reforms highlighting the role of the personal income tax in accomplishing them. This Report also states that redistributive objectives should not harm other goals of the tax system, mainly those related to the necessity of avoiding behavioral changes in economic agents. In this sense, the tradeoff between the principles of neutrality and equity necessarily imposes larger efficiency gains when reducing inequality. There are other additional reasons that make this topic especially interesting. Over the last years, income and wealth inequalities have been a subject of increasing concern among voters and policy-makers. As a result, there is a growing demand for a better knowledge of the possibilities and limits of the policies that governments put into practice to reduce them. It is in this context of intellectual curiosity and social preferences for redistribution that the three chapters of this doctoral dissertation have been written. The guideline is the analysis of how the ability to pay principle is implemented in the personal income tax from the perspective of vertical equity. The very notion of ability to pay is a cornerstone of the modern tax systems. However, consensus has not been reached in its definition neither on how to quantify it1. Regarding the personal income tax, it must be noted that from its very beginning it is the tax scheme with the most prominent role in income redistribution and the reduction in inequality. In this doctoral dissertation we aim at analyzing three key elements in the design of the personal income tax that are related to the measurement of the ability to pay and its taxation: the choice of the tax unit, the treatment of income sources and the imputed rental market value of owner-occupied housing. The issues under discussion are introduced aiming at providing an assessment of the impact of the alternative designs of the tax on its progressivity and redistributive capacity. In each case, potential social welfare gains are also identified. More precisely, this research tries to answer three specific questions. Based on the recognition that total household income is the best proxy for the ability to pay, the first chapter analyzes whether joint taxation is a better option than individual taxation both in terms of redistribution and social welfare. The question in the second chapter is how differentiated treatments by income sources in the personal income tax affect income inequality...