The Impact of Inflation on Income Tax and Social Insurance Contributions in Europe
AbstractInflation can alter the characteristics of tax- and contribution systems in numerous ways. This paper demonstrates how inflation alters the distributive properties of nominally defined tax systems and looks at the impact of the tax revenues and social insurance contribution receipts generated. It provides quantitative estimates for Germany, The Netherlands and the UK, using a preliminary version of EUROMOD, a European tax-benefit microsimulation model. The integrated framework provided by the model permits the use of common income concepts across countries and therefore enables one to make informative comparisons of the distributive consequences of the inflation induced erosion of tax- band limits, thresholds, deductions, tax credits, etc. The paper also tests the performance of automatic indexing regimes used in two of the countries.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0302004.
Date of creation: 07 Feb 2003
Date of revision:
Note: Type of Document - ; figures: included. EUROMOD web-site:
Contact details of provider:
Web page: http://22.214.171.124
Inflation; Income Tax; Social Insurance Contributions; European Union; Microsimulation;
Find related papers by JEL classification:
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-10 (All new papers)
- NEP-EEC-2003-02-10 (European Economics)
- NEP-MAC-2003-02-10 (Macroeconomics)
- NEP-PKE-2003-02-10 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Aaron, Henry J, 1976. "Inflation and the Income Tax," American Economic Review, American Economic Association, vol. 66(2), pages 193-99, May.
- Amalio Humberto Petrei, 1975. "Inflation Adjustment Schemes under the Personal Income Tax (MÃ©thodes d'ajustement de l'impÃ´t sur le revenu des personnes physiques pour tenir compte de l'inflation) (Sistemas de ajuste del impue," IMF Staff Papers, Palgrave Macmillan, vol. 22(2), pages 539-564, July.
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