Führt Steuervereinfachung zu einer "gerechteren" Einkommensverteilung? Eine empirische Analyse für Deutschland

Clemens Fuest, Thilo Schaefer, Andreas Peichl

FiFo / Januar 2006 / Diskussionsbeitrag, FiFo

Abstract
The simplification of the tax system is a key objective of many income tax reform proposals. This is not only because complexity leads to high compliance costs for taxpayers. The complexity of income tax systems is also seen as an obstacle to achieving a fair distribution of the tax burden. According to a widespread view, complexity allows taxpayers with high incomes to use tax loopholes and reduce their tax burden. The present paper investigates the distributional impact of tax simplification empirically, for the case of Germany. Our analysis is based on a simulation model for the German tax and transfer system (FiFoSiM) using income tax and household survey microdata. We model tax simplification as the abolition of a set of controversial deductions from the tax base included in the German income tax system.We find that this form of tax base simplification leads to a more equitable income distribution and, not surprisingly, an increase in tax revenue. If these measures are combined with a reduction of income tax rates to preserve revenue neutrality, the distributional impact depends on the type of rate schedule adjustment. The combination with a flat rate tax would imply that the reform redistributes in favour of the very high incomes, and overall income inequality increases. The combination with a less radical rate schedule adjustment, which preserves the directly progressive rate schedule, yields a tax reform which reduces the inequality of after tax incomes.