Distributional and Welfare Effects of Germany's Year 2000 Tax Reform

Richard Ochmann

VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis from Verein für Socialpolitik / German Economic Association

Abstract: This paper empirically investigates distributional and welfare effects of Germany's year 2000 tax reform. The reform is simulated in an ex-ante behavioral microsimulation approach. Dead weight loss of capital income taxation is estimated in a structural model for household savings and asset demand applied to German survey data. Significant reductions in tax rates result in income gains, especially in higher tax brackets, whereby income inequality increases, in particular in East-Germany. Moreover, households increase savings and alter the structure of asset demand due to shifts in relative asset prices. As a result, utility losses reduce welfare effects for almost all households.

Keywords: Capital income taxation; household savings; asset demand; welfare effects (search for similar items in EconPapers)
JEL-codes: G11 H24 H31 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Distributional and Welfare Effects of Germany's Year 2000 Tax Reform (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc11:48686

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