The static microsimulation model of the Italian Department of Finance: Structure and first results regarding income and housing taxation

Abstract

In this paper we present a first attempt to develop a representative and flexible static tax-benefit microsimulation model, based on an exact match among a representative sample survey of the Italian income and living conditions in 2009-2010, provided by the Italian Institute of Statistics, and corresponding personal income tax returns, as well as cadastral data of the real estate properties of each individual, provided by the Department of Finance of the Italian Ministry of Economy and Finance on the same tax year. This static tax-benefit model can evaluate tax revenue and the redistributive impact of property and personal income taxation based on income types and levels actually declared with details of tax deductions. It should allow more reliable and detailed results compared to those based only on survey data and incomes declared to interviewers