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ISER research informs new European Commission policy briefs on fairness

European commission building flags

Four policy briefs featuring analysis using ISER’s tax-benefit microsimulation model, EUROMOD, have been published in a new set of outputs that form part of the European Commission’s Joint Research Centre’s (JRC) ongoing comparative research project on fairness.

The project focuses on several dimensions of fairness including social mobility, regional and inter-generational inequalities, and perceptions of fairness. It also examines the distribution of income and wealth – including the distributional impacts of tax-benefit systems – and it is here that the four new reports make a contribution.

The main message from Increasing progressivity in flat-tax countries: potential positive equity and efficiency impacts is that moving away from the kind of flat income tax schedules favoured by several Central and Eastern European countries in recent decades could lead to reductions in income inequality without hindering economic performance.

The fiscal and social cost of tax evasion: the impact of under reporting of income by the self-employed addresses the issue of income underreporting by the self-employed, noting that this form of tax evasion not only depresses revenues but also has negative distributional impacts due to the typical location of the self-employed in the higher end of the income distribution.

Old welfare in new labour markets? The social protection of atypical workers highlights that atypical workers are in general less well protected than traditional employees by the tax-benefit system in the event of unemployment. Simulations using EUROMOD show that extending unemployment insurance to the self-employed would significantly improve their income protection and lessen their exposure to the risk of poverty on becoming unemployed.

Finally, the use of wealth taxes is examined in The budgetary and redistributive effects of wealth-related taxes. The brief notes that, across the countries analysed, their use is even and their redistributive effects are currently very limited.