A model is presented for simulating the level of taxes imposed on highly skilled labor. The effective average tax rate, defined as the relative wedge between employment costs and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent...

This paper uses generational accounting to assess the fiscal impacts of Korean reunification. Our findings suggest that early reunification will result in a large increase in the fiscal burden for most current and future generations of South Koreans. The Korean reunification's fiscal impact...

When debating an existing or proposed indirect tax, particular emphasis is often given to the disproportional effect of the tax. This effect is intended to show how the welfare loss from the tax is distributed across households with various income levels. Typically, the disproportional effect is...

This paper presents empirical evidence on the distributional effect of public higher education through analysis of a cross-sectional view of West Germany in 1997. In contrast to a widely held hypothesis in economics, our findings do not show evidence for a regressive effect. The use of a...

We identify several objectionable features of the German retirement benefit formula. Groups of insureds with higher than average life expectancy are subsidized by the rest of the members because the formula neglects differences in group-specific life expectancy. Moreover, undesirable long-run...

Individuals in most all countries face a wide range of direct taxes on their income, especially variants of the individual income tax and payroll taxes. For the income tax, attempts are often made to reduce the compliance and administrative costs of the tax by using presumptive, or simplified,...

Within an efficiency-wage framework, we study the effects of two revenue-neutral tax reforms that change the progressivity of the labor tax system. A revenue-neutral increase in both the wage tax and the tax exemption and a revenue-neutral change in the composition of labor taxation towards the...

In a noncompetitive environment, a tax increase leads to a higher fraction of sales smuggled under pure ad valorem taxation, but the effect is ambiguous under a purely specific tax. Under a mixed tax regime, a tax rise increases the fraction of sales smuggled when the balance of the two types of...

We evaluate the welfare impact of changing the VAT on food in a context in which households can produce home meals for own consumption that compete with meals served in restaurants. Home production of meals requires the combination of food and time inputs. The fiscal treatment in home production...

This aims to provide a perspective on the ideal tax system, using insights from optimal-tax theory supplemented with empirical evidence. These insights are applied to actual policy questions regarding the progressiveness of the labor-income tax, in-work tax credits, the design of the...