Does Germany Collect Revenue from Taxing Capital Income?
A widespread objection to the introduction of consumption tax systems claims that this would lead to high tax revenue losses. This paper investigates the revenue effects of a consumption tax reform in Germany. Our results suggest that the revenue losses would be surprisingly low. We find a maximum revenue loss of 1.6 percent of annual GDP. In some years, we even find a tax revenue gain. This implies that the current tax system collects little revenue from taxing the normal return to capital. Based on these results, we calculate a macroeconomic measure of the effective tax rate on capital income.
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- Roger Gordon & Laura Kalambokidis & Joel Slemrod, 2003. "A New Summary Measure of the Effective Tax Rate on Investment," NBER Working Papers 9535, National Bureau of Economic Research, Inc.
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- Gordon, Roger & Kalambokidis, Laura & Slemrod, Joel, 2004.
"Do we now collect any revenue from taxing capital income?,"
Journal of Public Economics,
Elsevier, vol. 88(5), pages 981-1009, April.
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