Does Germany Collect Revenue from Taxing Capital Income?
AbstractA widespread objection to the introduction of consumption tax systems claims that this would lead to high tax revenue losses. This paper investigates the revenue effects of a consumption tax reform in Germany. Our results suggest that the revenue losses would be surprisingly low. We find a maximum revenue loss of 1.6 percent of annual GDP. In some years, we even find a tax revenue gain. This implies that the current tax system collects little revenue from taxing the normal return to capital. Based on these results, we calculate a macroeconomic measure of the effective tax rate on capital income.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1489.
Date of creation: 2005
Date of revision:
cash flow tax; tax revenue effects; effective taxation of capital income;
This paper has been announced in the following NEP Reports:
- NEP-ACC-2005-08-17 (Accounting & Auditing)
- NEP-ALL-2005-08-14 (All new papers)
- NEP-FMK-2005-08-17 (Financial Markets)
- NEP-PBE-2005-10-10 (Public Economics)
- NEP-PUB-2005-08-25 (Public Finance)
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