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Effects of the Austrian Income Tax Reform 2015/2016 on Private Consumption: Survey Findings

Author

Listed:
  • Ralf Kronberger

    (Austrian Federal Economic Chamber, Financial, Fiscal and Trade Policy Department)

  • Christoph Schmid

    (Austrian Federal Economic Chamber, Financial, Fiscal and Trade Policy Department)

Abstract

We use survey findings to analyse the effects of the Austrian income tax reform 2015/2016 on private consumption differentiated by income classes. Using survey data, we also estimate the corresponding average marginal propensities to consume and compare them to applied average marginal propensities to consume in economic models used to analyse the previous two income tax reforms in Austria. The estimated average marginal propensity to consume amounts to approximately 0.46, whereby in tendency increasing from the lowest income class (0.42-0.43) to the highest income class (0.48-0.50). Our estimated average marginal propensity to consume across all income classes basically corresponds to those used in economic models to evaluate the income tax reform 2015/2016. However, our estimated marginal propensities to consume by income classes fundamentally differ from those used in the economic models.

Suggested Citation

  • Ralf Kronberger & Christoph Schmid, 2018. "Effects of the Austrian Income Tax Reform 2015/2016 on Private Consumption: Survey Findings," Department of Economics Working Papers wuwp275, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp275
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    More about this item

    Keywords

    income tax reform; private consumption response; marginal propensity to consume; survey methodology;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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