The personal income tax in Italy: why does it change?

This paper analyses the effects of the personal income tax (PIT) changes implemented in Italy in the period 1995-2005 on redistribution and efficiency. On the redistributive side, using Lorenz dominance techniques and their correspondence with welfare prescriptions, the paper shows that many changes of PIT do not appear fruitful for the purpose of redistributing income. Furthermore, there is no conclusive evidence that PIT changes since 1995 are targeted on condition of greater needs, as those of households with children, especially because a significant part of tax credits paid for this purpose are non-refundable. Finally, on the efficiency side, PIT changes in the last decade do not avoid the presence of high effective marginal tax rates when PIT and child benefits are jointly considered.