Kiel Working Papers, Kiel Institute for World Economics
No 1304:
Der deutsche Einkommensteuertarif: Weiterhin eine Wachstumsbremse?
Achim Boss, Alfred Boss and Thomas Boss
Abstract: The structure of income taxation in Germany implies that
the marginal and the average tax rates will rise in the course of the
coming years—even if the increase of nominal incomes is modest. The
elasticity of the wage income tax revenues with respect to gross wages
amounts to about 1.9, assuming that average wages rise by 1.5 percent per
year; such wage increases would probably mean that real wages remain
constant. The rising tax rates impair the incentive to work and dampen the
growth of potential output. Regular tax rate cuts would seem to be
necessary to avoid bracket creep. Indexation of the income tax system might
be a real option for economic policy.
Keywords: Marginale und durchschnittliche Lohnsteuerbelastung, Aufkommenselastizität, heimliche Steuererhöhungen, Indexierung; (follow links to similar papers)
JEL-Codes: H24; (follow links to similar papers)
23 pages, December 2006
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