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

This paper analyses the effects of the personal income tax (PIT) changes implement-ed in Italy in the period 1995-2005 on redistribution and efficiency. On the redistrib-utive side, using Lorenz dominance techniques and their correspondence with welfareprescriptions, the paper shows that many changes of PIT do not appear fruitful forthe purpose of redistributing income. Furthermore, there is no conclusive evidencethat PIT changes since 1995 are targeted on condition of greater needs, as those ofhouseholds with children, especially because a significant part of tax credits paid forthis purpose are non-refundable. Finally, on the efficiency side, PIT changes in the lastdecade do not avoid the presence of high effective marginal tax rates when PIT andchild benefits are jointly considered.