The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement

Vincent Vergnat; Conchita D’Ambrosio; Philippe Liégeois

doi:10.1177/10911421221113842

The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement

Vincent Vergnat, Conchita D’Ambrosio, Philippe Liégeois

Living Conditions

Research output: Contribution to journal › Article › peer-review

Abstract

This article studies the distribution of income in Luxembourg by integrating two aspects that have been previously neglected: indirect taxation and in-kind transfers. The integration of the latter is essential in Luxembourg, the country with the highest public expenditure per capita in the Organisation for Economic Co-operation and Development (OECD). These issues have been understudied because of some methodological challenges, including the lack of data containing all the necessary information for this type of analysis. However, with the EUROMOD microsimulation model, different data sources, and imputation methods, we are able to obtain a more complete view of the income distribution in Luxembourg. We find that, as in many developed countries, indirect taxes are regressive. On the other hand, in-kind transfers play an important role in reducing income inequality, in particular through education and health services.

Original language	English
Pages (from-to)	436-483
Number of pages	48
Journal	Public Finance Review
Volume	50
Issue number	4
DOIs	https://doi.org/10.1177/10911421221113842
Publication status	Published - 7 Aug 2022

Bibliographical note

Funding Information:
This work is part of the 2018–2020 project “Gathering expertise for a more comprehensive view of income components in Luxembourg,” in collaboration with the Luxembourg Institute of Socio-Economic Research (LISER), the University of Luxembourg, and the Chambre des Salariés du Luxembourg (CSL). The results presented here are based on EUROMOD version I1.0+. EUROMOD is maintained, developed, and managed by the Institute for Social and Economic Research (ISER) at the University of Essex, in collaboration with national teams from the EU member states. We are indebted to the many people who have contributed to the development of EUROMOD. The process of extending and updating EUROMOD is financially supported by the European Union Programme for Employment and Social Innovation “EaSI” (2014–2020). We make use of microdata from the EU Statistics on Income and Living Conditions, made available by Eurostat (RPP 213/2019-EU-SILC) and the National Household Budget Survey data, made available by the Luxembourg statistical office (STATEC).

Keywords

microsimulation
inequality
indirect taxation
income distribution
in-kind transfers

Access to Document

10.1177/10911421221113842

Cite this

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title = "The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement",

abstract = "This article studies the distribution of income in Luxembourg by integrating two aspects that have been previously neglected: indirect taxation and in-kind transfers. The integration of the latter is essential in Luxembourg, the country with the highest public expenditure per capita in the Organisation for Economic Co-operation and Development (OECD). These issues have been understudied because of some methodological challenges, including the lack of data containing all the necessary information for this type of analysis. However, with the EUROMOD microsimulation model, different data sources, and imputation methods, we are able to obtain a more complete view of the income distribution in Luxembourg. We find that, as in many developed countries, indirect taxes are regressive. On the other hand, in-kind transfers play an important role in reducing income inequality, in particular through education and health services.",

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author = "Vincent Vergnat and Conchita D{\textquoteright}Ambrosio and Philippe Li{\'e}geois",

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The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement

Abstract

Bibliographical note

Keywords

Access to Document

Other files and links

EUROMOD Year 10: Regular maintenance of the EUROMOD tax-benefit microsimulation model and preparation of its transfer to the European Commission

Cite this

The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement

Abstract

Bibliographical note

Keywords

Access to Document

Other files and links

Projects

EUROMOD Year 10: Regular maintenance of the EUROMOD tax-benefit microsimulation model and preparation of its transfer to the European Commission

Cite this