Does Germany Collect Revenue from Taxing Capital Income?

Johannes Becker and Clemens Fuest

No 1489, CESifo Working Paper Series from CESifo

Abstract: A widespread objection to the introduction of consumption tax systems claims that this would lead to high tax revenue losses. This paper investigates the revenue effects of a consumption tax reform in Germany. Our results suggest that the revenue losses would be surprisingly low. We find a maximum revenue loss of 1.6 percent of annual GDP. In some years, we even find a tax revenue gain. This implies that the current tax system collects little revenue from taxing the normal return to capital. Based on these results, we calculate a macroeconomic measure of the effective tax rate on capital income.

Keywords: cash flow tax; tax revenue effects; effective taxation of capital income (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-acc, nep-fmk, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1489

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