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

  • Baclet, Alexandre

    ()

    (INSEE)

  • Dell, Fabien

    ()

    (Paris School of Economics)

  • Wrohlich, Katharina

    ()

    (DIW Berlin)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1894.

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Length: 41 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1894
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  1. O'Donoghue, Cathal & Sutherland, Holly, 1999. "Accounting for the Family in European Income Tax Systems," Cambridge Journal of Economics, Oxford University Press, vol. 23(5), pages 565-98, September.
  2. Jürgen Schupp & Gert G. Wagner, 2002. "Maintenance of and Innovation in Long-Term Panel Studies: The Case of the German Socio-Economic Panel (GSOEP)," Discussion Papers of DIW Berlin 276, DIW Berlin, German Institute for Economic Research.
  3. Letablier, Marie-Th駻鑚e, 2003. "Fertility and Family Policies in France," Discussion Paper 160, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  4. Corak, Miles & Lietz, Christine & Sutherland, Holly, 2005. "The Impact of Tax and Transfer Systems on Children in the European Union," IZA Discussion Papers 1589, Institute for the Study of Labor (IZA).
  5. Rüdiger Parsche & Rigmar Osterkamp, 2004. "Child Support and Children's Tax Allowances in Selected European Countries," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(3), pages 50-54, October.
  6. Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
  7. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2006. "Top Incomes and Top Taxes in Germany," CESifo Working Paper Series 1641, CESifo Group Munich.
  8. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  9. 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.
  10. Laisney, François & Beninger, Denis & Beblo, Miriam, 2003. "Family Tax Splitting: A Microsimulation of its Potential Labour Supply and Intra-household Welfare Effects in Germany," ZEW Discussion Papers 03-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Christian Schmitt & Ulrike Winkelmann, 2005. "Wer bleibt kinderlos?: Sozialstrukturelle Daten zur Kinderlosigkeit von Frauen und Männern," Discussion Papers of DIW Berlin 473, DIW Berlin, German Institute for Economic Research.
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