IDEAS home Printed from https://ideas.repec.org/p/zbw/fubsbe/20101.html
   My bibliography  Save this paper

Horizontal equity in the German tax-benefit system: A simulation approach for employees

Author

Listed:
  • Bönke, Timm
  • Eichfelder, Sebastian

Abstract

We analyze the distributive justice of the combined burden of taxes, social security contributions and public transfers on employee households. In order to investigate whether the treatment of families by the aggregate tax-benefit system can be regarded as 'fair', we compare the equivalent incomes of eight different household types. Using the concepts of system-inherent equivalence scales and horizontal equity we find evidence for a structural discrimination of low income families, while families in the high income brackets tend to be privileged. The equity in the treatment of a household type is not only affected by the amount but also by the distribution of income between the household members. Based on these results we can state a significant contradiction of value judgments within the German tax-benefit system. From the perspective of our paper, there is no convincing justification for this inconsistency.

Suggested Citation

  • Bönke, Timm & Eichfelder, Sebastian, 2010. "Horizontal equity in the German tax-benefit system: A simulation approach for employees," Discussion Papers 2010/1, Free University Berlin, School of Business & Economics.
  • Handle: RePEc:zbw:fubsbe:20101
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/36681/1/625879414.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jack Habib, 1979. "Horizontal Equity with Respect to Family Size," Public Finance Review, , vol. 7(3), pages 283-302, July.
    2. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
    3. Bönke, Timm & Eichfelder, Sebastian, 2008. "Horizontale Gleichheit im Abgaben-Transfersystem: eine Analyse äquivalenter Einkommen von Arbeitnehmern in Deutschland," arqus Discussion Papers in Quantitative Tax Research 36, arqus - Arbeitskreis Quantitative Steuerlehre.
    4. Donaldson, D. & Pendakur, K., 1999. "Equivalent-Income Functions and Income-Dependent Equivalence Scales," Discussion Papers dp99-8, Department of Economics, Simon Fraser University.
    5. Ebert, Udo & Moyes, Patrick, 2000. "Consistent Income Tax Structures When Households Are Heterogeneous," Journal of Economic Theory, Elsevier, vol. 90(1), pages 116-150, January.
    6. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    7. Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 175-208, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bönke, Timm & Kemptner, Daniel & Lüthen, Holger, 2018. "Effectiveness of early retirement disincentives: Individual welfare, distributional and fiscal implications," Labour Economics, Elsevier, vol. 51(C), pages 25-37.
    2. Hrvoje Simovic, 2012. "Effect of expenditures in personal income taxation on horizontal equity in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 36(3), pages 245-267.
    3. Bartels, Charlotte & Pestel, Nico, 2016. "Short- and long-term participation tax rates and their impact on labor supply," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(6), pages 1126-1159.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bönke, Timm & Eichfelder, Sebastian & Utz, Stephen, 2012. "Uneven treatment of family life? Horizontal equity in the U.S. tax and transfer system," Discussion Papers 2012/18, Free University Berlin, School of Business & Economics.
    2. repec:zbw:hohpro:331 is not listed on IDEAS
    3. Bönke, Timm & Eichfelder, Sebastian, 2008. "Horizontale Gleichheit im Abgaben-Transfersystem: eine Analyse äquivalenter Einkommen von Arbeitnehmern in Deutschland," arqus Discussion Papers in Quantitative Tax Research 36, arqus - Arbeitskreis Quantitative Steuerlehre.
    4. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    5. repec:old:wpaper:331 is not listed on IDEAS
    6. Luis José Imedio Olmedo & Encarnación Macarena Parrado Gallardo & María Dolores Sarrión Gavilán, 2005. "Horizontal equity, equal progression: an utilitarian approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 174(3), pages 87-115, September.
    7. Carbonell-Nicolau, Oriol & Llavador, Humberto, 2018. "Inequality reducing properties of progressive income tax schedules: the case of endogenous income," Theoretical Economics, Econometric Society, vol. 13(1), January.
    8. Udo Ebert & Peter J. Lambert, 2004. "Horizontal Equity and Progression When Equivalence Scales Are Not Constant," Public Finance Review, , vol. 32(4), pages 426-440, July.
    9. Jean-Yves Duclos & Peter Lambert, "undated". "A Normative Approach to Measuring Classical Horizontal Inequity," Discussion Papers 97/3, Department of Economics, University of York.
    10. Achille VERNIZZI & Maria Giovanna MONTI & Marek KOSNY, 2006. "An overall inequality reducing and horizontally equitable tax system with application to Polish data," Departmental Working Papers 2006-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    11. Udo Ebert & Patrick Moyes, 2002. "Welfare, inequality and the transformation of incomes the case of weighted income distributions," Journal of Economics, Springer, vol. 9(1), pages 9-50, December.
    12. Udo Ebert, 2008. "Living Standard, Social Welfare, and the Redistribution of Income in a Heterogeneous Population," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 873-889, October.
    13. Christian Dudel & Jan Marvin Garbuszus & Notburga Ott & Martin Werding, 2015. "Income Dependent Equivalence Scales, Inequality, and Poverty," CESifo Working Paper Series 5568, CESifo.
    14. Claudio Zoli & Peter Lambert, 2012. "Sequential procedures for poverty gap dominance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(2), pages 649-673, July.
    15. Jorge Onrubia Fernández & María del Carmen Rodado Ruiz, 2015. "oGravamen individual o grupal en el IRPF? Una valoración desde la movilidad distributiva," Studies on the Spanish Economy eee2015-01, FEDEA.
    16. Patrick Moyes & Alain Trannoy, 1999. "Le quotient familial : une structure fiscale cohérente avec le critère de Lorenz relatif," Économie et Prévision, Programme National Persée, vol. 138(2), pages 111-124.
    17. Antoine Bozio & Thomas Breda & Julien Grenet & Arthur Guillouzouic, 2024. "Does Tax-Benefit Linkage Matter for the Incidence of Payroll Taxes?," Working Papers halshs-02191315, HAL.
    18. Luis José Imedio Olmedo & Elena Bárcena Martín, 2002. "Códigos impositivos, desigualdad y bienestar," Hacienda Pública Española / Review of Public Economics, IEF, vol. 160(1), pages 29-46, march.
    19. Nanak Kakwani & Hyun Hwa Son, 2021. "Normative Measures of Tax Progressivity: an International Comparison," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(1), pages 185-212, March.
    20. Ashantha Ranasinghe & Xuejuan Su, 2023. "When social assistance meets market power: A mixed duopoly view of health insurance in the United States," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 851-869, October.
    21. Gajdos, Thibault & Maurin, Eric, 2004. "Unequal uncertainties and uncertain inequalities: an axiomatic approach," Journal of Economic Theory, Elsevier, vol. 116(1), pages 93-118, May.
    22. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.

    More about this item

    Keywords

    horizontal equity; family taxation; distributive justice; tax-benefit system; equivalent income;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:20101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.