The hidden burden of the income tax: Compliance costs of German individuals

Kay Blaufus, Sebastian Eichfelder and Jochen Hundsdoerfer

No 2011/6, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: We analyze the compliance costs of individual taxpyers resulting from the German income tax. using survey data that has been raised between December 2008 and April 2009, we find evidence for a considerably higher cost burden of self-employed taxpaxers. Taxable income and the demand for external support are positively correlated with compliance costs, while the time effort of female taxpayers is significantly lower. We also find evidence for a positive correlation of education and tax knowledge with the compliance burden. By contrast, a joint assessment of a married couple seems to reduce the monetized time effort. The aggregated cost burden of German income taxpayers amounts to 6.1-7.2 billion €, respectively 3.2-3.7 % of the income tax revenue in 2007. This estimate is higher than latest projections in a number of other European countries like Spain and Sweden, but significantly lower than results for the United States and Australia.

Keywords: tax complexity; tax compliance costs; compliance burden; red tape; personal income tax (search for similar items in EconPapers)
JEL-codes: H21 H23 H25 H26 H83 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-acc, nep-eur and nep-pub
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:20116

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