Professions, Entrepreneurs, Employees and the New German Tax (Cut) Reform 2000 - A MICSIM Microsimulation Analysis of Distributional Impacts

FFB Discussion Paper No. 34

107 Pages Posted: 21 Feb 2009

See all articles by Joachim Merz

Joachim Merz

Research Institute on Professions; Research Institute on Professions; Leuphana University of Lueneburg; Institute for the Study of Labor (IZA)

Henning Stolze

Research Institute on Professions / Leuphana University

Markus Zwick

Federal Statistical Office of Germany - Research Data Center

Date Written: July 2002

Abstract

With the tax reform 2000 Germany has seen the implementation of the most ambitious tax reduction programme in its post-war history. In the period from 1998 to 2005, taxpayers will benefit substantially from net tax relief more than DM 100 billions in total. It is expected, that private consumption and investment are stimulated - two essential requirements for promoting growth and employment.

Under the aspect of the tax reform 2000 and the 'Karlsruher Entwurf' (an expert draft on further income tax reform approaches) compared to the former taxbase system we investigate in our paper overall and distributional and redistributional impacts on the self employed (professions (free lancers) and entrepreneurs) and employees besides other socioeconomic grouping like gender and family type. In addition, a decomposition analysis based on a generalized entropy approach quantifies the socioeconomic subgroups' inequality contribution to overall inequality.

Together with the recent poverty and wealth report for our government, this is the first time that the anonymized microdata records of the German Income Tax Statistic can be used by researchers within the Federal Statistical Office. Such a microdata file is essential for analysing above all the often neglected situation of the selfemployed; in traditional surveys, where, in principle, firm information yielding the final income and taxes to be paid are not available for the self-employed.

Keywords: microsimulation, German tax reform, Karlsruhe proposal, self-employed, professions, entrepreneurs, employees, distributional and redistributional policy impacts, inequality and decomposition of inequality

JEL Classification: D30, D31, J23

Suggested Citation

Merz, Joachim and Merz, Joachim and Stolze, Henning and Zwick, Markus, Professions, Entrepreneurs, Employees and the New German Tax (Cut) Reform 2000 - A MICSIM Microsimulation Analysis of Distributional Impacts (July 2002). FFB Discussion Paper No. 34, Available at SSRN: https://ssrn.com/abstract=1316806

Joachim Merz (Contact Author)

Research Institute on Professions ( email )

Lüneburg
Germany

Research Institute on Professions ( email )

Lüneburg
Germany

Leuphana University of Lueneburg

Scharnhorststrasse 1
Lüneburg, 21314
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Henning Stolze

Research Institute on Professions / Leuphana University ( email )

Lüneburg
Germany

Markus Zwick

Federal Statistical Office of Germany - Research Data Center ( email )

Gustav - Stresemann - Ring 11
Wiesbaden, 65189
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
72
Abstract Views
965
Rank
585,331
PlumX Metrics