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Lenard Simon

@lenardsimon.bsky.social

Economist, German Council of Economic Experts Former Economics PhD Student, University of Bonn All views are my own. https://sites.google.com/view/lenardsimon

10 Posts55 Follower67 Folgt
Jakob Wegmann@jakobwegmann.bsky.social · 2y ago

Hello #EconSky! 📢Excited to share my #JMP 📢 It provides a missing piece to understand how people react to income taxation. Tldr: By changing tax pre-payments governments can - with almost no costs - increase perceived work incentives of secondary earners and reduce the gender gap. Thread below👇🧵

To collect income taxes, almost all countries require employers to withhold monthly tax prepayments which are then fully credited against the final income tax liabilities of their employees. Despite being a fundamental component of income taxation systems worldwide, the impact of these withholding taxes on labor supply is poorly understood. We investigate their importance in the context of married couples in Germany where the withholding tax liability can be redistributed between spouses. We exploit a reform that reduced the withholding tax for some married women more than for others, while inducing no differences in income taxes. Using administrative data for the full population of German taxpayers, we estimate an elasticity of labor income with respect to the withholding tax eight years after the reform of 0.14. Additional evidence from a self-conducted survey suggests imperfect understanding of the tax system and limited pooling of resources within the household as the main mechanisms. As the majority of couples shift parts of the withholding tax liability from the husband to the wife, our results suggest that the increased withholding tax liability of married women contributes to their low labor supply. This highlights the need for governments to be aware of the distortion of labor supply incentives when the design of withholding taxes does not match actual income tax incentives.
Monika Schnitzer@monika-schnitzer.com · 3y ago

Hier - mit (fast) allen aus dem Stab & der Geschäftsstelle des @SVR_Wirtschaft - bei der Übergabe unseres Jahresgutachtens am 9.11. im Kanzleramt. Ein großes DANKESCHÖN an alle, die mit unglaublichem Engagement & immenser Expertise dieses tolle Gutachten möglich gemacht haben!

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