Tax reforms vs benefit enhancement to address mental health inequalities: a microsimulation study -conference paper abstract-

Authors

E. Igelström, D. Kopasker, Matteo Richiardi, S.V. Katikireddi

Publication Date

Oct 2025

Summary

Background: Socioeconomic inequalities in mental health are persistent across Europe. It is unclear whether progressive income tax reforms could reduce these inequalities. We compared the impact on mental health inequalities of redistributive taxation reforms alone to taxation reforms combined with benefit enhancement. Methods: We used the dynamic SimPaths microsimulation model with UK Household Longitudinal Study data to simulate household incomes, employment and mental health for 2026-35, comparing four fiscally neutral policy scenarios implemented using the EUROMOD tax-benefit model: (1) current UK policy; (2) enhanced progressivity (EP): Personal Allowance raised to Minimum Income Standard, higher tax rates increased to 81%; (3) reduced progressivity (RP): Personal Allowance removed and a flat rate of 18.7% applied to income; (4): enhanced progressivity with enhanced benefits (EPEB): tax bands and rates based on Denmark's with additional revenue used to increase means-tested benefits. Prevalence of poor mental health (GHQ-12 score >3) and relative indices of inequality (RIIs) (estimating the risk in the hypothetical lowest-income household vs the highest) were estimated. 1,000 model runs accounted for parameter uncertainty. Results: Income inequality (S80/S20 ratio) was 4.8 at baseline, decreasing by 0.4 in the EP scenario and 1.1 in the EPEB scenario, and increasing by 0.8 in the RP scenario. RII was 1.55 (95% CI 1.26, 1.92) at baseline, and barely changed in taxation-only scenarios: 1.57 (1.36, 1.81) for EP and 1.55 (1.38, 1.74) for RP. However, EPEB substantially reduced RII to 1.15 (1.04, 1.26), driven by reductions in poor mental health prevalence in the lowest income quintile. Conclusions: Income redistribution through income tax reform alone is unlikely to substantially improve socioeconomic mental health inequalities. Tax reforms need to be combined with increased benefits for the poorest to address mental health inequalities. Key messages: • Effective policy approaches to reducing health inequalities require direct support to the most disadvantaged groups rather than income redistribution through income tax alone. • Microsimulation modelling is an effective tool for evaluating how fiscal policies impact health inequalities, and can be applied across European countries using the EUROMOD tax-benefit model.

Volume

Volume: 35

DOI

https://doi.org/10.1093/eurpub/ckaf161.076

Publication type

Journal Article

Research areas

Health and wellbeing, Tax and benefit systems

Notes

18th European Public Health Conference 2025 Investing for sustainable health and well-being 12–14 November 2025 Helsinki, Finland Abstract Supplement; Open Access; This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact reprints@oup.com for reprints and translation rights for reprints. All other permissions can be obtained through our RightsLink service via the Permissions link on the article page on our site—for further information please contact journals.permissions@oup.com.; © The Author(s) 2025. Published by Oxford University Press on behalf of the European Public Health Association.

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