Reassessing Tax Fairness Through the Lens of Fiscal Fairness

Policy debates on European welfare states often rely on an incomplete notion of tax fairness that overlooks indirect taxes and in-kind public services. Using a comprehensive fiscal incidence framework, we show that once direct and indirect taxes, cash transfers, and in-kind benefits are jointly considered, the number of net contributor households in the EU declines substantially. While high-income households remain the primary net contributors, many low- and middle-income households are net beneficiaries due to the redistributive role of public services. I conclude that fiscal fairness, rather than tax fairness alone, provides a more appropriate basis for evaluating redistribution, sustainability, and welfare state reform.