Optimal taxation when the tax burden matters

Year: 2022
Type: Journal Publication
Journal: FinanzArchiv
Open Science:

Abstract

Survey evidence shows that the magnitude of the tax liability plays a role in value judgements about which groups deserve tax breaks. We demonstrate that the German tax-transfer system conflicts with a welfarist inequality averse social planner. It is consistent with a planner who is averse to both inequality and high tax liabilities. The tax-transfer schedule reflects non-welfarist value judgements of citizens or non-welfarist aims of policy makers. We extend our analysis to several European countries and the USA to show that their redistributive systems can be rationalized with an inequality averse social planner for whom the tax burden matters.

Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, ESMT Berlin and Goethe University Frankfurt who share the same research agenda.