Reconstructing Income Inequality in Italy: New Evidence and Tax System Implications from Distributional National Accounts.

This article reconstructs Italy’s income distribution from 2004 to 2015 using Distributional National Accounts (DINA) methodology, combining survey data, tax records, National Accounts, and wealth estimates to correct for underreporting of capital income and incorporate informal economy effects. The findings reveal higher income concentration at the top 1% and 0.1% than previously estimated, with these shares increasing notably after the 2008 financial crisis. The study highlights multifaceted inequality, showing that younger individuals, women, and residents of Southern Italy face greater disparities, while the Italian tax system is only mildly progressive up to the 95th income percentile and regressive for the top 5%, especially when individuals are ranked by net wealth. The research also details income composition by source and region, and provides the first comprehensive assessment of tax progressivity in Italy, emphasizing the limited redistributive impact of taxes and the regressive nature of taxation on wealth.