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Distributional and Fiscal Effects of the German Tax Reform 2000: A Behavioral Microsimulation Analysis

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  • Peter Haan
  • Viktor Steiner

Abstract

In the year 2000, the German government passed the most ambitious tax reform in postwar German history aiming at a significant tax relief for households. Drawing on data of the GSOEP, we analyze the distributional and fiscal effects of the tax reform. Our analysis employs microsimulation techniques. Furthermore, we estimate behavioral effects of the tax reform using a discrete choice labor supply model. We find that the tax reform leads to a significant increase of net household income. The relative gains increase with taxable income, thus income inequality is rising. We also find that behavioral effects reduce the revenue loss.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.41670.de/dp419.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 419.

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Length: 28 p.
Date of creation: 2004
Date of revision:
Handle: RePEc:diw:diwwpp:dp419

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Keywords: Tax reform; Behavioral effects; Distribution and fiscal effects;

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References

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  1. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  2. Robert A. Moffitt & Mark Wilhelm, 1998. "Taxation and the Labor Supply: Decisions of the Affluent," NBER Working Papers 6621, National Bureau of Economic Research, Inc.
  3. John Creedy & Alan Duncan, 2001. "Aggregating labour supply and feedback effects in microsimulation," IFS Working Papers, Institute for Fiscal Studies W01/24, Institute for Fiscal Studies.
  4. Gerhard Wagenhals, 2000. "Incentive and Redistribution Effects of the German Tax Reform 2000," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 57(3), pages 316-, May.
  5. Peter Haan, 2004. "Discrete Choice Labor Supply: Conditional Logit vs. Random Coefficient Models," Discussion Papers of DIW Berlin 394, DIW Berlin, German Institute for Economic Research.
  6. Stefan Homburg, 2000. "German Tax Reform 2000. Description and Appraisal," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 57(4), pages 504-513, August.
  7. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  8. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers, Institute for Fiscal Studies W98/18, Institute for Fiscal Studies.
  9. Gerhard Wagenhals, 2000. "Arbeitsangebotseffekte des Steuer- und Transfersystems in der Bundesrepublik Deutschland," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 220(2), pages 191-213.
  10. Victor R. Fuchs & Alan B. Krueger & James M. Poterba, 1998. "Economists' Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1387-1425, September.
  11. Austan Goolsbee, 1998. "It's Not About the Money: Why Natural Experiments Don't Work on the Rich," NBER Working Papers 6395, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Spadaro, Amedeo, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," EUROMOD Working Papers EM10/08, EUROMOD at the Institute for Social and Economic Research.
  2. Bargain, Olivier & Orsini, Kristian, 2006. "In-work policies in Europe: Killing two birds with one stone?," Labour Economics, Elsevier, vol. 13(6), pages 667-697, December.
  3. Stefan Bach & Peter Haan & Ralf Maiterth & Caren Sureth, 2004. "Modelle für die Vermögensbesteuerung von natürlichen Personen und Kapitalgesellschaften: Konzepte, Aufkommen, wirtschaftliche Wirkungen ; Endbericht ; Forschungsprojekt im Auftrag der Bundestagsfrakti," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 1, number pbk1, July.
  4. Alfred Boss & Achim Boss & Thomas Boss, 2008. "Der deutsche Einkommensteuertarif: Wieder eine Wachstumsbremse?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(1), pages 102-124, 02.
  5. Ondřej Schneider & Tomáš Jelínek, 2005. "Distributive Impact of Czech Social Security and Tax Systems: Dynamics in Early 2000s," Prague Economic Papers, University of Economics, Prague, vol. 2005(3), pages 221-237.
  6. Olivier Bargain & Amedeo Spadaro, 2008. "Optimal Taxation, Social Contract and the Four Worlds of Welfare Capitalism," Working Papers, School Of Economics, University College Dublin 200816, School Of Economics, University College Dublin.

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