Vortrag
The Role of Capital Income for Top Income Shares in Germany

Charlotte Bartels, Katharina Jenderny

Taxation in a Global Economy : 71st Annual Conference of the International Institute of Public Finance (IIPF 2015)
Dublin, Irland, 20.08.2015 - 23.08.2015



Abstract:
The disappearance of capital income from the income tax base in many countries poses a major challenge to the comparability of top income share series based on income tax statistics both over time and between countries. First, we extend the existing German series including capital gains to 2010. Second, we derive three homogeneous series by simulating legislative definitions of capital income prevailing between 2001 and 2010. We employ a rich data set containing the tax files of all income taxpayers. Third, we construct a composite measure as a proxy for capital income missing in the data since 2009. We find that the drop in top income shares obtained from income tax statistics in the crisis year 2009 is largely attributable to the exclusion of capital income from the income tax base.