Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73736
Authors: 
Radulescu, Doina Maria
Stimmelmayr, Michael
Year of Publication: 
2005
Series/Report no.: 
Ifo Working Paper 20
Abstract: 
This paper investigates the effects of implementing a dual income tax (DIT) in Germany. We follow the reform proposal of the German Council of Economic Advisors(2003) and analyze its implications on capital formation, investment and welfare using a dynamic computable general equilibrium model. The main features of the model are an intertemporal investment model and the traditional Ramsey model on the household side. Our findings suggest that the introduction of a DIT with a proportional capital income tax rate of 30% and progressive labour income tax rates up to 35% leads to higher investments, an increased capital accumulation up to 5.8% and welfare gains of about 1% of GDP.
Subjects: 
Capital income taxation computable general equilibrium modelling welfare analysis
JEL: 
C68
D58
D92
E62
H25
Document Type: 
Working Paper

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