| Summary: | ISER Working Paper Series www.iser.essex.ac.ukNon-technical summary Two types of income taxes can be distinguished by the tax rate schedule: graduated rate taxes and flat rate taxes. While graduated rate taxes apply a different tax rate at different income levels, flat rate taxes apply a single tax rate to the whole income range. Until mid-1990s most of the countries in the world relied on graduated rate income taxes and flat income tax was used only in a few countries. Since then flat income tax has gained popularity, especially in Eastern Europe. Such reform proposals are also discussed in Western European countries, however, none of them has adopted it yet with the only exception of Iceland. While flat taxes are considered (among else) to improve peoples’ incentive to work, one may argue that they receive less political support in countries with well-established middle class due to their distributional effects. This paper tries to answer the question what would be the impact on income distribution, e.g. in terms of inequality and poverty, of implementing a flat income tax in Western European countries. Using EUROMOD, which is a taxbenefit
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