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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.

Suggested Citation

  • Peter Haan & Viktor Steiner, 2004. "Distributional and Fiscal Effects of the German Tax Reform 2000: A Behavioral Microsimulation Analysis," Discussion Papers of DIW Berlin 419, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp419
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    Cited by:

    1. Junyi Zhu, 2014. "Bracket Creep Revisited - with and without r > g: Evidence from Germany," Journal of Income Distribution, Ad libros publications inc., vol. 23(3), pages 106-158, November.
    2. 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, May.
    3. 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.
    4. Amedeo Spadaro, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," Working Papers 98, ECINEQ, Society for the Study of Economic Inequality.
    5. Olivier Bargain & Amedeo Spadaro, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," Working Papers 200816, School of Economics, University College Dublin.
    6. 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, February.
    7. Amadéo Spadaro, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," Working Papers halshs-00586290, HAL.
    8. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2015. "Zukunftsfähigkeit in den Mittelpunkt. Jahresgutachten 2015/16," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201516.
    9. Sara Torregrosa Hetland & Oriol Sabaté, 2018. "Income tax and war inflation: was the ‘blood tax’ compensated by taxing the rich?," Working Papers 18010, Economic History Society.
    10. Ondřej Schneider & Tomáš Jelínek, 2005. "Distributive Impact of Czech Social Security and Tax Systems: Dynamics in Early 2000s," Prague Economic Papers, Prague University of Economics and Business, vol. 2005(3), pages 221-237.

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    More about this item

    Keywords

    Tax reform; Behavioral effects; Distribution and fiscal effects;
    All these keywords.

    JEL classification:

    • 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
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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