Simplification and decentralization of the income tax

This article presents a new type of welfare-improving reform model aimed at simultaneously achieving simplification and decentralization of the person al income tax This model is based on the results of Pfahler and Dardanoni a nd Lambert and comprises two elements. The first one is the transformation of the income tar into an equal-yield flat tax. The second one is a reducti on of the central taxation in proportion to posttax income in order to vaca te a space that may be utilized by subcentral jurisdictions through a surch arge applied on the central tax liability. The theoretical proposal is illu strated with a microsimulation exercise on the Spanish personal income tax.