Resumen de Marginal income tax reforms and welfare
Is it possible to increase overall welfare through a spatial di®erentiation of the income tax ? In this paper we explore the possibility for a marginal tax reform based on the di®erentiation of a proportional tax among jurisdictions. We use a methodology developed by Yitzhaki and Slemrod (1991) to analyse Dalton-improving tax reforms applied to commodity taxation. We adapt this methodology replacing commodities by incomes belonging to households who live in two di®erent regions A and B, and we de¯ne welfare improving dominance conditions associated to a marginal di®erentiation of the tax rate in every region of a uniform proportional income tax. Migration movements and the e®ect of the tax reform on taxpayer's taxable income are considered in the analysis. Numerical simulations using income tax data for Spain illustrate the possible impact of the suggested tax reform on overall welfare.
