Dynamic scoring of tax reforms in the European Union

Publication type:

Journal Article

Authors

Salvador Barrios, Mathias Dolls, Anamaria Maftei, Andreas Peichl, Sara Riscado, Janos Varga and Christian Wittneben

Publication date

1 Jun 2019

Summary

In this paper, we present the first dynamic scoring exercise linking a microsimulation and a dynamic general equilibrium model for Europe. We illustrate our novel methodology analyzing hypothetical reforms of the social insurance contributions system in Belgium. Our approach takes into account the feedback effects resulting from adjustments and behavioral responses in the labor market and the economy‐wide reaction to the tax policy changes essential for a comprehensive evaluation of the reforms. We find that the self‐financing effect of a reduction in employers’ social insurance contribution is substantially larger than that of a comparable reduction in employees’ social insurance contributions.

Published in

Journal of Policy Analysis and Management

DOI

https://doi.org/10.1002/pam.22105

Subjects

Economics, Microsimulation, Taxation and Economic Policy