Tackling the regressivity at the top of the Italian tax system: An optimal taxation framework with heterogeneous returns to capital
Review of Income and Wealth (2026) [PDF link] 

With Dalle Luche M., Palagi E., Roventini A., Santoro A. 

In this paper, we exploit the new data available from the European Central Bank's Distributional Wealth Accounts (DWA) to reconstruct the distribution of capital income in Italy by accounting for heterogenous eturns to capital. With respect to previous estimates, we find that capital income is more concentrated along the income distribution and the Italian tax system is more regressive with lower tax rates hinging on the top 7%.  We show that such rates are remarkably lower than those suggested by an optimal taxation approach and we provide estimates for revenues and inequality reductions that could be attained by applying (higher) optimal rates either to capital income or wealth while controlling for various degree of behavioral responses. These results provide a direction for revenue-increasing and inequality-reducing tax reforms in Italy.
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Reconstructing Income Inequality in Italy: New Evidence and Tax System Implications from Distributional National Accounts
Journal of the European Economic Association (2023)  [PDF link] [Data link]

With Palagi E., Roventini A., Santoro A.  

In this study we examines income distribution in Italy using a unique combination of survey, tax, and National Accounts data. Findings reveal increased income concentration among the top 1% and 0.1% since 2008, impacting younger individuals, women, and Southern region residents disproportionately. The Italian tax system is mildly progressive up to the 95th percentile but becomes regressive for the top 5% and consistently regressive when considering net wealth. 

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In search of lost time: An ensemble of policies to restore fiscal progressivity and address the climate challenge
Chapter of: Financing Investment in Times of High Public Debt: 2023 European Public Investment Outlook  [PDF link]

With Palagi E., Faccio T., Roventini A. 

The study explores EU-level tools to enhance fiscal progressivity and secure additional revenue for funding climate policies in a just green transition. Our proposal includes implementing a wealth tax on the top 1%, taxing unrealized capital gains, and raising the minimum corporate tax. Using data on wealth distribution at the EU-Level together with Forbes list data, we estimates that these reforms could yield substantial annual revenue, approximately 1.9%-2.9% of EU GDP. These funds could bolster climate initiatives and diminish inequality, fostering sustainable and inclusive growth across EU economies.

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