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Introducing Family Tax Splitting in Germany: How Would It Affect the Income Distribution, Work Incentives, and Household Welfare?

Viktor Steiner and Katharina Wrohlich ()

FinanzArchiv: Public Finance Analysis, 2008, vol. 64, issue 1, 115-142

Abstract: We analyze the effects of three different proposals to introduce a family tax-splitting system in Germany. The empirical analysis is based on a behavioral microsimulation model, which integrates an empirical household labor-supply model into a detailed tax-benefit model. Our results show that, under each reform, the lion's share of the reduction in taxes would accrue to families in the upper part of the income distribution, and that labor-supply effects are small. If budgetary balance were financed by a reduction of the child benefit, our results suggest that none of the reforms would be welfare-improving.

Keywords: Household taxation; income distribution; work incentives; microsimulation (search for similar items in EconPapers)
JEL-codes: H24 H31 J22 (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1628/001522108X312096

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