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DYNAMIC SCORING OF TAX REFORMS IN THE EUROPEAN UNION
Author(s) -
Barrios Salvador,
Dolls Mathias,
Maftei Anamaria,
Peichl Andreas,
Riscado Sara,
Varga Janos,
Wittneben Christian
Publication year - 2018
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.22105
Subject(s) - microsimulation , economics , european union , social insurance , public economics , general equilibrium theory , reduction (mathematics) , tax policy , macroeconomics , tax reform , economic policy , market economy , geometry , mathematics , transport engineering , engineering
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.