Distributional and Welfare Effects of Germany's Year 2000 Tax Reform
AbstractThis paper empirically investigates distributional and welfare effects of Germany's year 2000 income tax reform. The reform is simulated in an ex-ante behavioral microsimulation approach. Dead weight loss of changes in capital income taxation is estimated in a structural model for household savings and asset demand applied to German survey data. Significant reductions in tax rates result in income gains for most of the households. Gains are found greater for households in higher tax brackets, whereby income inequality increases, slightly greater in East- than in West-Germany. Moreover, households increase savings and alter the structure of asset demand as a result of shifts in relative asset prices. As a consequence, utility losses reduce welfare effects for almost all households.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1083.
Length: 36 p.
Date of creation: 2010
Date of revision:
Capital income taxation; household savings; asset demand; welfare effects;
Other versions of this item:
- Ochmann, Richard, 2011. "Distributional and Welfare Effects of Germany's Year 2000 Tax Reform," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48686, Verein für Socialpolitik / German Economic Association.
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-12-11 (Accounting & Auditing)
- NEP-ALL-2010-12-11 (All new papers)
- NEP-CMP-2010-12-11 (Computational Economics)
- NEP-PUB-2010-12-11 (Public Finance)
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