Progressive Taxation and Social Welfare: Quantifying the Effects of the “German Tax-Reform 2000”

IF 1.2 4区 经济学 Q3 ECONOMICS
Benjamin Jung, Timo Walter
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Abstract

The German “Tax-Reform 2000” involved a strong reduction in the progressivity of labor income taxation. It led to a rise in overall labor income, but also increased income inequality. Utilizing data from the German Socio-Economic Panel (SOEP. 2016. Socio-Economic Panel (SOEP), Data for Years 1984–2016, Version 33) for the years 1998–2007, we employ a general equilibrium framework à la Antràs et al. (Antràs, P., A. De Gortari, and O. Itskhoki. 2017. “Globalization, Inequality and Welfare.” Journal of International Economics 108: 387–412) characterized by heterogeneous individuals. The model imposes a constant rate of tax progressivity and allows for a theory-consistent decomposition of social welfare that highlights the equity-efficiency trade-off, namely into (i) the fundamental social welfare level that would arise in a Kaldor-Hicks economy with lump-sum transfers, (ii) a correction term that accounts for the social cost of inequality à la Atkinson (Atkinson, A. B. 1970. “On the Measurement of Inequality.” Journal of Economic Theory 2 (3): 244–63) or Sen (Sen, A. 1970. Collective Choice and Social Welfare. Harvard University Press), and (iii) a correction term for the social cost of distortionary taxation. Our estimations show that the German tax system can be well approximated by the imposed tax schedule and that the reform implied a fall in the degree of tax progressivity. Under the baseline calibration, the numerical analysis yields the following results: First, the main driver of growth in social welfare from 1998 to 2007 was fundamental social welfare. Second, the counterfactual analysis shows that the reform resulted in an annual average income growth of 0.62 % and an increase in income inequality of 0.32 %, indicating an only modest increase in social welfare of 0.07 %. Third, the actual tax progression converged to its social welfare maximizing level.
累进税与社会福利:量化 "德国 2000 年税制改革 "的影响
德国 "2000 年税制改革 "大幅降低了劳动所得税的累进性。这导致了总体劳动收入的增加,但也加剧了收入不平等。利用德国社会经济面板数据(SOEP.2016.Socio-Economic Panel (SOEP),Data for Years 1984-2016, Version 33)1998-2007 年的数据,我们采用了类似于 Antràs 等人的一般均衡框架(Antràs, P., A. De Gortari, and O. Itskhoki.2017."全球化、不平等与福利》。国际经济学杂志》108:387-412)。该模型设定了一个恒定的税收累进率,并允许对社会福利进行理论一致的分解,以突出公平与效率的权衡,即分解为:(i) 在卡尔多-希克斯(Kaldor-Hicks)经济中一次性转移支付所产生的基本社会福利水平;(ii) 一个修正项,该修正项考虑了阿特金森(Atkinson, A. B. 1970."On the Measurement of Inequality.Journal of Economic Theory 2 (3):244-63)或森(Sen, A. 1970.集体选择与社会福利》。哈佛大学出版社),以及 (iii) 扭曲性税收的社会成本修正项。我们的估算结果表明,德国的税制可以很好地近似于征税表,而改革意味着税收累进程度的下降。在基线校准下,数值分析得出以下结果:首先,1998 年至 2007 年社会福利增长的主要驱动力是基本社会福利。第二,反事实分析表明,改革导致年均收入增长 0.62%,收入不平等程度增加 0.32%,表明社会福利仅略微增加了 0.07%。第三,实际税收递增趋同于社会福利最大化水平。
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来源期刊
CiteScore
2.30
自引率
9.10%
发文量
17
期刊介绍: German Economic Review, the official publication of the German Economic Association (Verein für Socialpolitik), is an international journal publishing original and rigorous research of general interest in a broad range of economic disciplines, including: - macro- and microeconomics - economic policy - international economics - public economics - finance - business administration The scope of research approaches includes theoretical, empirical and experimental work. Innovative and thought-provoking contributions, in particular from younger authors, are especially welcome.
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