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Shifting Taxes from Labor to Consumption: Efficient, but Regressive?
| Content Provider | Semantic Scholar |
|---|---|
| Author | Pestel, Nico Sommer, E. A. |
| Copyright Year | 2013 |
| Abstract | Shifting taxes from labor income to consumption is regularly suggested as a measure to induce work incentives. We investigate the effect of increases in the Value Added Tax on labor supply and the income distribution in Germany, which is compensated by a revenue-neutral reduction in income-related taxes. Based on a dual data base and a microsimulation model of labor supply behavior, we confirm a general regressive impact of such a tax shift in the short run. When accounting for labor supply adjustments, the adverse distributional impact persists for personal income tax reductions, while the overall effects on inequality and progressivity become substantially lower when payroll taxes are reduced, which is due to increased work incentives, especially for low-income households. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://repec.iza.org/dp7804.pdf |
| Alternate Webpage(s) | https://www.econstor.eu/bitstream/10419/92505/1/77841566X.pdf |
| Alternate Webpage(s) | https://www.diw.de/documents/publikationen/73/diw_01.c.436144.de/diw_sp0624.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
