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Archive » February 2020 » The progressive Income Tax: rise, fall and future

The progressive Income Tax: rise, fall and future

Antonio Pedone
February 2020 - n. 2
Keywords: Imposta sul reddito, Normativa tributaria
Jel codes: H20, H24

During the twentieth century, progressive personal income tax had a rapid rise and a slow decline. Among the causes of the rise there is the push of social movements, the extension of electoral suffrage, the two world wars, the rivalry with the Soviet Union, more than the influence of economic theory. The high tax progressivity, accentuated by the great inflation of the 1970s and 1980s, was accompanied by a very strong growth in differentiated tax treatments, consisting of the various forms of erosion of the tax base and of tax avoidance and tax evasion. This race towards tax havens of all kinds has reached the highest levels in the Italian case. The race towards numerous forms of erosion of the tax base and of tax avoidance and tax evasion was favoured by a very fragmented production and employment structure and by a low efficiency of the tax administration. This has had negative consequences on economic growth and social cohesion.

 

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