Die Elastizität des zu versteuernden Einkommens in Deutschland – Eine empirische Untersuchung auf Basis des deutschen Taxpayer-Panels (The Elasticity of Taxable Income in Germany – An Empirical Study Based on the German Taxpayer-Panel)

In this paper the current literature's standard approach is used to estimate the elasticity of taxable income with respect to the net-of-tax rate using tax return data from the German Taxpayer-Panel spanning the years 2001 to 2006. To our knowledge this is done the first time for Germany using more than one difference and therefore adequate income controls. The effect of a change in the individual`s marginal tax rate on the amount of taxable income is identified using a tax reform (Steuersenkungsgesetz) which was announced in the year 2000 and led to a stepwise reduction of marginal tax rates for all taxpayers in the following years. The estimates suggest an elasticity of taxable income between 0.3 and 0.4 and an elasticity of a broader income definition ranging from 0.2 to 0.4. These estimates are mainly driven by people in the upper half of the income distribution and joint assessment of married couples