The distributive impact of tax evasion in Italy

The authors adopt a “direct approach” and microsimulation techniques to measure distributive effect of tax evasion in Italy. Previous research found that income declared in the SHIW was, on average, higher than the equivalent figures on the tax authority’s files. The percentage of incomeconcealed from the tax authorities decreased with income; consequently, if tax had notbeen evaded, disposable income would have been distributed in a slightly less equal.The present study is going to adopt their same approach, albeit with an explicitexamination and discussion of the question of whether the observed redistributive effectsof tax compliance is a result of re-ranking produced by tax evasion. Our results suggest that the assumptions made regarding re-ranking effects are bound to play a major role in redistributive effects estimations.