Modelling aggregate personal income tax revenue in multi-schedular and multi-regional structures

This paper derives analytical expressions for aggregate personal income tax revenue obtained from a multi-schedular and multi-regional personal income tax system, with revenue divided among central and regional governments. Aggregate income tax revenue is expressed as a function of characteristics of the distribution of taxable income, making it possible to identify the sources of revenue differences among regions. The approach is applied to the tax structure in Spain, and the effects of income distribution differences among the Spanish regions are examined.

► Tax revenue is modelled for multi-regional and multi-schedular structures. ► Income distribution and tax structure components are isolated. ► The approach is applied to the Spanish income tax structure. ► Differences in taxable capacity among regions are examined. ► The effects on regions' revenues of changes in the income distribution are examined.