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Distributional Effects of the German Tax Reform 2000 - A Behavioral Microsimulation Analysis

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Haan, P., Steiner, V. Distributional Effects of the German Tax Reform 2000 - A Behavioral Microsimulation Analysis. Journal of Contextual Economics – Schmollers Jahrbuch, 125(1), 39-49. https://doi.org/10.3790/schm.125.1.39
Haan, Peter and Steiner, Viktor "Distributional Effects of the German Tax Reform 2000 - A Behavioral Microsimulation Analysis" Journal of Contextual Economics – Schmollers Jahrbuch 125.1, 2005, 39-49. https://doi.org/10.3790/schm.125.1.39
Haan, Peter/Steiner, Viktor (2005): Distributional Effects of the German Tax Reform 2000 - A Behavioral Microsimulation Analysis, in: Journal of Contextual Economics – Schmollers Jahrbuch, vol. 125, iss. 1, 39-49, [online] https://doi.org/10.3790/schm.125.1.39

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Distributional Effects of the German Tax Reform 2000 - A Behavioral Microsimulation Analysis

Haan, Peter | Steiner, Viktor

Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 125 (2005), Iss. 1 : pp. 39–49

7 Citations (CrossRef)

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Article Details

Haan, Peter

Steiner, Viktor

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Abstract

In the year 2000, the German government passed the most ambitious tax reform in postwar German history aiming at significant tax relief for households. We analyze the effects of this reform an the distribution of household incomes using a behavioral microsimulation model based an representative micro-data from the German Socio-Economic Panel (SOEP). Our empirical analysis accounts for the effects of bracket creeping and labor supply adjustment an the distribution of household incomes. We find that the tax reform leads to a significant increase in net household income. The relative gains increase with taxable income, thus income inequality is rising. This is slightly mitigated by the impact of the labor supply responses induced by the reform, especially at the lower end of the income distribution.