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Winners and losers in changing tax and benefit policies in Europe

Tax redistribution copyright alex proimos

How household incomes and wealth are distributed, what socio-economic consequences that has and how the distribution is affected by public policies have gained considerable and increasing attention in academic and policy debates in recent years.

This reflects growing awareness that policy changes are rarely distribution-neutral (if ever). Raising legitimate questions about who gains and who loses from a given policy change and – more importantly – whether this is acceptable, is a healthy sign of transparent policy decision-making processes.

Recent analysis with the EU-wide tax-benefit model, EUROMOD, reveals how changes in direct taxes and cash benefits since the outbreak of the economic crisis in 2008 affected the size and distribution of household disposable income. It allows isolating policy effects such as reforms to the design of the tax-benefit system or changes to tax levels and benefit amounts (relative to price changes) from other factors shaping the income distribution, e.g. changes in population characteristics and market income distribution.

Read Iva Tasseva and Alari Paulus´s full briefing here.

Image credit: Alex Proimos