Topic Taxes

Financial Support for Families with Children and Its Trade-Offs: Balancing Redistribution and Parental Work Incentives

Financial support for families with children implies inherent trade-offs some of which are less obvious than others. In the end these trade-offs determine the effectiveness of policy with respect to the material situation of families and employment of their parents. We analyse several kinds of trade-offs involved using a careful selection of potential changes to the system of financial support for ...

Corporate Taxation: High Profits, Moderate Tax Revenue

If the revenue from corporate taxation in Germany is divided by the corporate income figures from national accounts, companies' average tax burden for the period 2001 to 2008 is 21 percent. This rate is considerably lower than the statutory tax rates for this period. The reason for this is that tax-reported corporate income was well below macroeconomic corporate income. This taxation gap was something ...

Has German Business Income Taxation Raised too Little Revenue over the Last Decades?

This study presents comprehensive macroeconomic measures on the revenue from business taxation in Germany. A comparison of the tax base reported in tax statistics with the corporate income derived from national accounts gives hints to considerable tax base erosion. The high weight of reported tax losses underlines this result. The average implicit tax rate on corporate income was around 21 percent ...

Fiscal Federalism and Tax Administration: Evidence from Germany

In many federations, fiscal equalization schemes soften fiscal imbalances across the member states. Such schemes usually imply that the member states internalize only a small fraction of the additional tax revenue from an expansion of the state-specific tax bases, while the remainder of the additional tax revenue is redistributed horizontally or vertically. We address the question as to which extent ...

EUROMOD Country Report Germany: EUROMOD Version F7.0; Project on Behalf of the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission

Effective Taxation of Top Incomes in Germany

We exploit a dataset that includes the individual tax returns of all taxpayers in the top percentile of the income distributionin Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion intoaccount, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5% and contributes more than a quarter of total ...

Differential Taxation and Firms' Financial Leverage: Evidence from the Introduction of a Flat Tax on Interest Income

Tax competition for the mobile factor capital has led to a trend in many countries to levy lower taxes on interest income, often introducing differential taxation between interest and business income. In this study, we analyze the effect of such differential taxation on the debt ratio of firms. We exploit a 2009 tax reform in Germany as a quasi-experiment, which introduced a flat final withholding ...

Distributional Effects of the European Emissions Trading System and the Role of Revenue Recycling: Empirical Evidence from Combined Industry- and Household-Level Data

We calculate the expected distributional effects of the European Emissions Trading System combining industry and household-level data. By combining data on direct CO2 emissions by production sector from the German Environmental Account with the German Input-Output Accounts, we calculate the CO2 intensity of each sector covered by the EU ETS. We focus on the impact of price increases in the electricity ...

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 ...

How Do Taxes Affect Investment When Firms Face Financial Constraints?

This study uses a switching regression framework with known sample separation to analyze the effects of corporate income taxation on investment in case of binding and non-binding financial constraints. By employing two different sample splitting criteria, payout behavior and the ratio of liabilities to total assets, I show that the elasticity of capital to its user costs in an auto-distributed-lag ...