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The Distributional Effects of the 2015-16 Tax Reform

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  • Silvia Rocha-Akis

Abstract

A key objective of the Austrian income tax reform to be implemented in 2015-16 lies in substantially lowering the tax burden of wage and income tax payers. Hence, a question of central importance is how the tax reform will affect the net individual and household incomes and which distributional and tax revenue effects are to be expected from the reform. Using microsimulation techniques, the effects caused by the changes in the wage and income tax regime as well as in the social security contributions are quantified for 2016. The results show that the reform leads to an increase of 3.1 percent in average disposable household income. The net income gain in absolute and percentage terms increases with the pre-reform net income. This holds true for earned and pension incomes as well as for household income. As a consequence, income inequality increases slightly. Households with and without children are equally affected by the reform. The simulated loss of fiscal revenue amounts to € 4.9 billion. More than half of this shortfall (56 percent) arises due to lower revenues from households in the top third of the distribution of net household incomes while around 12 percent is attributable to the bottom third.

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  • Silvia Rocha-Akis, 2015. "The Distributional Effects of the 2015-16 Tax Reform," WIFO Bulletin, WIFO, vol. 20(21), pages 238-249, December.
    • Handle: RePEc:wfo:wblltn:y:2015:i:21:p:238-249
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    References listed on IDEAS

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    1. Margit Schratzenstaller, 2015. "Steuerreform 2015/16 – Maßnahmen und Gesamteinschätzung," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(5), pages 371-385, May.
    2. Felfe, Christina, 2012. "The motherhood wage gap: What about job amenities?," Labour Economics, Elsevier, vol. 19(1), pages 59-67.
    3. Margit Schratzenstaller, 2015. "The Tax Reform 2015-16 – Measures and Overall Assessment," WIFO Bulletin, WIFO, vol. 20(20), pages 222-237, December.
    4. René Böheim & Klemens Himpele & Helmut Mahringer & Christine Zulehner, 2013. "The gender wage gap in Austria: eppur si muove!," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(4), pages 585-606, November.
    5. Christine Mayrhuber & Christian Glocker & Thomas Horvath & Silvia Rocha-Akis, 2015. "Entwicklung und Verteilung der Einkommen in Österreich," WIFO Studies, WIFO, number 50897, February.
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    Cited by:

    1. Margit Schratzenstaller, 2016. "Fiscal Policy Facing Major Challenges with Tax Reform, Need for Growth-Enhancing Investment and Consolidation Targets. Federal Fiscal Framework 2016-2019 and Draft Federal Budget 2016," WIFO Bulletin, WIFO, vol. 21(2), pages 12-29, February.
    2. Sheila Quinn, 2016. "Europe: A Survey of Gender Budgeting Efforts," IMF Working Papers 2016/155, International Monetary Fund.
    3. Josef Baumgartner & Serguei Kaniovski, 2015. "The Tax Reform 2015-16 – Macroeconomic Effects up to 2019," WIFO Bulletin, WIFO, vol. 20(22), pages 250-265, December.
    4. Margit Schratzenstaller, 2015. "The Tax Reform 2015-16 – Measures and Overall Assessment," WIFO Bulletin, WIFO, vol. 20(20), pages 222-237, December.
    5. Baumann, Alexendra & Wohlrabe, Klaus, 2019. "Publikationen von Wirtschaftsforschungsinstituten im deutschsprachigen Raum - Eine bibliometrische Analyse [Publications of Economic Research Insitutes in the German Speaking Area - A bibliometric ," MPRA Paper 92240, University Library of Munich, Germany.
    6. Gerhard Streicher, 2015. "Using the FIDELIO Model to Estimate the Effects of the Tax Reform 2015-16 on Net Output," WIFO Bulletin, WIFO, vol. 20(23), pages 266-272, December.

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