Fiscal union in Europe? Redistributive and stabilising effects of an EU tax-benefit system

"The current debt crisis has given rise to a debate about deeper fiscal integration in Europe. The view is widespread that moving towards a 'fiscal union' would have a stabilising effect in the event of macroeconomic shocks. In this paper we study the economic effects of introducing t...

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Main Authors: Bargain, Olivier, Dolls, Mathias, Fuest, Clemens, Neumann, Dirk, Peichl, Andreas, Pestel, Nico, Siegloch, Sebastian
Institution:ETUI-European Trade Union Institute
Format: TEXT
Language:English
Published: Bonn 2012
IZA
Subjects:
Online Access:https://www.labourline.org/KENTIKA-19134395124919525779-Fiscal-union-in-europe?-Redist.htm
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author Bargain, Olivier
Dolls, Mathias
Fuest, Clemens
Neumann, Dirk
Peichl, Andreas
Pestel, Nico
Siegloch, Sebastian
author_facet Bargain, Olivier
Dolls, Mathias
Fuest, Clemens
Neumann, Dirk
Peichl, Andreas
Pestel, Nico
Siegloch, Sebastian
collection Library items
description "The current debt crisis has given rise to a debate about deeper fiscal integration in Europe. The view is widespread that moving towards a 'fiscal union' would have a stabilising effect in the event of macroeconomic shocks. In this paper we study the economic effects of introducing two elements of a fiscal union: Firstly, an EU-wide tax and transfer system and secondly, an EU-wide system of fiscal equalisation. Using the European tax-benefit calculator EUROMOD, we exploit representative household microdata from 11 Eurozone countries to simulate these policy reforms and to study their effects on the distribution of income as well as their impact on automatic fiscal stabilisers. We find that replacing one third of the national tax and transfer systems by a European system would lead to significant redistributive effects both within and across countries. These effects depend on income levels and the structures of the existing national tax and transfer systems. The EU system would improve fiscal stabilisation especially in credit constrained countries. It would absorb between 10 and 15 per cent of a macroeconomic income shock. Introducing a fiscal equalisation system based on taxing capacity would redistribute revenues from high to low income countries. The stabilisation properties of this system, however, are ambiguous. This suggests that not all forms of fiscal integration will improve macroeconomic stability in the Eurozone."
format TEXT
geographic EU countries
id 19134395124919525779_d765913dba45457cad346670b5177e3b
institution ETUI-European Trade Union Institute
is_hierarchy_id 19134395124919525779_d765913dba45457cad346670b5177e3b
is_hierarchy_title Fiscal union in Europe? Redistributive and stabilising effects of an EU tax-benefit system
language English
physical 31 p.
Digital
publishDate 2012
publisher Bonn
IZA
spellingShingle Bargain, Olivier
Dolls, Mathias
Fuest, Clemens
Neumann, Dirk
Peichl, Andreas
Pestel, Nico
Siegloch, Sebastian
European integration
fiscal policy
income tax
statistics
taxation
Fiscal union in Europe? Redistributive and stabilising effects of an EU tax-benefit system
thumbnail https://www.labourline.org/Image_prev.jpg?Archive=112961393014
title Fiscal union in Europe? Redistributive and stabilising effects of an EU tax-benefit system
topic European integration
fiscal policy
income tax
statistics
taxation
url https://www.labourline.org/KENTIKA-19134395124919525779-Fiscal-union-in-europe?-Redist.htm