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Income Taxation and Household Size: Would French Family Splitting Make German Families Better Off ?

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  • Alexandre Baclet
  • Fabien Dell
  • Katharina Wrohlich

Abstract

In this paper, we address the question whether family support via the income tax system is more generous in France than in Germany, as it is often claimed in the public debate. We use two micro-data sets and a micro-simulation model to compare effective average tax rates for different household types in France and Germany. Our analysis shows that the popular belief that French high income families with children face lower average tax rates than their German counterparts is true, however not due to the French Family splitting but rather to the different definitions of taxable incomes in both countries. Actually, low income families with less than three children even fare better in terms of tax relief in Germany than in France. The French system leads to lower average tax rates than the German one (over a large range of the income distribution) only for families with three children.

Suggested Citation

  • Alexandre Baclet & Fabien Dell & Katharina Wrohlich, 2005. "Income Taxation and Household Size: Would French Family Splitting Make German Families Better Off ?," Discussion Papers of DIW Berlin 542, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp542
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    5. Rüdiger Parsche & Rigmar Osterkamp, 2004. "Child Support and Children's Tax Allowances in Selected European Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(3), pages 50-54, October.
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    7. Jörg Althammer, 2002. "Familienbesteuerung - Reformen ohne Ende?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 71(1), pages 67-82.
    8. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2005. "Top Incomes and Top Taxes in Germany," Discussion Papers of DIW Berlin 532, DIW Berlin, German Institute for Economic Research.
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    Cited by:

    1. Richard Ochmann & Katharina Wrohlich, 2013. "Familiensplitting der CDU/CSU: Hohe Kosten bei geringer Entlastung für einkommensschwache Familien," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 80(36), pages 3-11.
    2. Fabien Dell & Katharina Wrohlich, 2006. "Income Taxation and its Family Components in France," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(4), pages 50-54, 02.
    3. Fabien Dell & Katharina Wrohlich, 2006. "Income Taxation and its Family Components in France," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(04), pages 50-54, February.
    4. S. Verzillo & A. Santoro & M. Mezzanzanica, 2017. "Family splitting versus joint taxation: a case-study," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(2), pages 337-354, August.
    5. Gruber, Magdalena & Höhenberger, Nicole & Höserle, Silke & Niemann, Rainer, 2009. "Familienbesteuerung in Österreich und Deutschland: Eine vergleichende Analyse unter Berücksichtigung aktueller Steuerreformen," arqus Discussion Papers in Quantitative Tax Research 82, arqus - Arbeitskreis Quantitative Steuerlehre.
    6. Johannes Geyer & Viktor Steiner, 2007. "Short-Run and Long-Term Effects of Childbirth on Mothers' Employment and Working Hours across Institutional Regimes: An Empirical Analysis Based on the European Community Household Panel," Discussion Papers of DIW Berlin 682, DIW Berlin, German Institute for Economic Research.
    7. Ivica Urban & Martina Pezer, 2018. "Microsimulation of Child Benefits: A Review of Studies," International Journal of Microsimulation, International Microsimulation Association, vol. 11(3), pages 134-169.
    8. Steiner, Viktor & Wrohlich, Katharina, 2006. "Introducing Family Tax Splitting in Germany: How Would It Affect the Income Distribution and Work Incentives?," IZA Discussion Papers 2245, Institute of Labor Economics (IZA).
    9. Viktor Steiner & Katharina Wrohlich, 2008. "Introducing Family Tax Splitting in Germany: How Would It Affect the Income Distribution, Work Incentives, and Household Welfare?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(1), pages 115-142, March.
    10. repec:ces:ifodic:v:4:y:2006:i:4:p:14567444 is not listed on IDEAS

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    More about this item

    Keywords

    Income taxation; Family; Income distribution; France; Germany;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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