Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/106825
Authors: 
Werdt, Clive
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, School of Business & Economics: Economics 2015/5
Abstract: 
This paper provides new empirical insights on the elasticity of taxable income for Germany. Using a rich panel of German income tax return data, the tax reforms of 2004 and 2005 are exploited implementing a new dynamic income model. Showing and discussing potential estimation problems of the most prominent model in the literature by Gruber and Saez (2002), this dynamic model delivers significant smaller estimates of the elasticity of taxable income. The overall estimate is 0.36 and robust against a number of sensitivity checks including non linear income controls. Elasticities differ between married and single assessed taxpayers with an elasticity of 0.17 for single and 0.44 for married taxpayers. These elasticities are similar to recent German results and considerablly smaller than recent results for the US from Weber(2014).
Subjects: 
taxable income elasticity
dynamic panel data estimation
income tax return data
administrative data
JEL: 
C26
H21
H61
Document Type: 
Working Paper

Files in This Item:
File
Size
559.65 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.