Topic Taxes

Longevity, Life-Cycle Behavior and Pension Reform

How can public pension systems be reformed to ensure fiscal stability in the face of increasing life expectancy? To address this pressing open question in public finance, we estimate a life-cycle model in which the optimal employment, retirement and consumption decisions of forward-looking individuals depend, inter alia, on life expectancy and the design of the public pension system. We calculate that, ...

A Wealth Tax on the Rich to Bring down Public Debt? Revenue and Distributional Effects of a Capital Levy

The idea of higher wealth taxes to finance the mounting public debt in the wake of the financial crises is gaining ground in several OECD countries. We evaluate the revenue and distributional effects of a one-time capital levy on personal net wealth that is currently on the German political agenda. We use survey data from the German Socio-Economic Panel (SOEP) and estimate the net wealth distribution ...

Longevity, Life-Cycle Behavior and Pension Reform

Can Child Care Policy Encourage Employment and Fertility? Evidence from a Structural Model

We develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between these two outcomes. To identify the effect of financial incentives on employment and fertility we exploit variation in the tax and transfer system, which differs by employment state and number of children. Specifically, we simulate in detail the effects of the tax and transfer ...

Optimal Top Marginal Tax Rates under Income Splitting for Couples

This paper provides formulas for optimal top marginal tax rates when couples are taxed according to income splitting between spouses, consumption is taxed, and the skill distribution is unbounded. Optimal top marginal income tax rates are computed for Germany using a dataset that includes the tax returns of all German top taxpayers. We find that the optimal top marginal tax rate converges to about ...

Sharing the Burden: Empirical Evidence on Corporate Tax Incidence

This study assesses the burden of capital income tax passed onto labor through wage bargaining over economic rents, using estimations based on a unique pseudo-panel data set from Germany for the period 1998 to 2006. Tax return data cover the universe of corporations subject to corporate income tax, and labor market variables reflect the full record of employees covered by Social Security. We find that ...

Effective Taxation of Top Incomes in Germany

We exploit an exhaustive administrative dataset that includes the individual tax returns of all households in the top percentile of the income distribution in Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion into account, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5 percent and contributes ...

A Wealth Tax on the Rich to Bring down Public Debt? Revenue and Distributional Effects of a Capital Levy

The idea of higher wealth taxes to finance the mounting public debt in the wake of the financial crises is gaining ground in several OECD countries. We evaluate the revenue and distributional effects of a one-time capital levy on personal net wealth that is currently on the German political agenda. We use survey data from the German Socio-Economic Panel (SOEP) and estimate the net wealth distribution ...

A Structural Approach to Estimating the Effect of Taxation on the Labour Market Dynamics of Older Workers

We estimate a dynamic structural life-cycle model of employment, non-employment and retirement that includes endogenous accumulation of human capital and intertemporal non-separabilities in preferences. In addition, the model accounts for the effects of income tax, social security contributions and the transfer system on work incentives. The structural parameter estimates are used to evaluate the employment ...

Optimal Taxation: The Design of Child-Related Cash- and In-Kind-Benefits

In this paper, we empirically derive the welfare function that guarantees that the current German tax and transfer system for single women is optimal. In particular, we compare the welfare function conditional on the presence and age of children and assess how recent reforms of in-kind childcare transfers affect the welfare function. Our analysis is based on a discrete model of optimal taxation. We ...