Shifting taxes from labor to consumption: more employment and more inequality
"This paper investigates the effect of shifting taxes from labor income to consumption on labor supply and the distribution of income in Germany. We simulate stepwise increases in the value-added tax (VAT) rate, which are compensated by revenue-neutral reductions in income-related taxes. We dif...
| Main Authors: | , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Mannheim
2015
ZEW |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19112206124919304889-Shifting-taxes-from-labor-to-c.htm |
| _version_ | 1771659898368557057 |
|---|---|
| author | Pestel, Nico Sommer, Eric |
| author_facet | Pestel, Nico Sommer, Eric |
| collection | Library items |
| description | "This paper investigates the effect of shifting taxes from labor income to consumption on labor supply and the distribution of income in Germany. We simulate stepwise increases in the value-added tax (VAT) rate, which are compensated by revenue-neutral reductions in income-related taxes. We differentiate between the personal income tax (PIT) and social security contributions (SSC). Based on a dual data base and a microsimulation model of household labor supply behavior, we find a regressive impact of such a tax shift in the short run. When accounting for labor supply adjustments, the adverse distributional impact persists for PIT reductions, while the overall effects on inequality and progressivity become lower when payroll taxes are reduced. This is partly due to increases in aggregate labor supply, resulting from higher work incentives." |
| format | TEXT |
| geographic | Germany |
| id | 19112206124919304889_d268bee25cc645c1adbc6c480f1f4172 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19112206124919304889_d268bee25cc645c1adbc6c480f1f4172 |
| is_hierarchy_title | Shifting taxes from labor to consumption: more employment and more inequality |
| language | English |
| physical | 39 p. Digital |
| publishDate | 2015 |
| publisher | Mannheim ZEW |
| spellingShingle | Pestel, Nico Sommer, Eric fiscal policy income tax taxation Shifting taxes from labor to consumption: more employment and more inequality |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=108037992621 |
| title | Shifting taxes from labor to consumption: more employment and more inequality |
| topic | fiscal policy income tax taxation |
| url | https://www.labourline.org/KENTIKA-19112206124919304889-Shifting-taxes-from-labor-to-c.htm |