Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/21854
Authors: 
Schellhorn, Hannes
Gottfried, Peter
Year of Publication: 
2004
Series/Report no.: 
IAW-Diskussionspapiere 15
Abstract: 
In 1990 the German personal income tax schedule underwent a major change. We interpret this reform as a ?natural experiment´ and use a panel of individual income tax returns to analyze the response of income to changes in the individual tax rates. Our results suggest an average elasticity of taxable income with respect to the net-of-tax rate of around 0.4. Due to the detailed information the panel provides, we are not only able to distinguish between different levels of income but also between different types of income. We found very low elasticity estimates in the case of regular employment income, but values of up to 1.0 for business income and for high-income households.
JEL: 
H24
H31
J29
Document Type: 
Working Paper

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