Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/68178 
Year of Publication: 
2012
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 526
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This paper offers a first empirical investigation of how labor taxation (income and payroll taxes) affects individuals' well-being. For identification, we exploit exogenous variation in tax rules over time and across demographic groups using 26 years of German panel data. We find that the tax effect on subjective well-being is significant and positive when controlling for income net of taxes. This interesting result is robust to numerous specification checks. It is consistent with several possible channels through which taxes affect welfare including public goods, insurance, redistributive taste and tax morale.
Subjects: 
subjective well-being
taxation
public goods
JEL: 
H21
H41
I38
Document Type: 
Working Paper

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