Year: 2024
Type: article
Abstract: The German coalition agreement (2021) intends to transform withholding tax class combination III/V for married couples to the symmetric tax class combination IV/IV with a factor, to strengthen economic independence and fairness. The taxation with a factor could eliminate possible disadvantages of tax class combination III/V, particularly the high marginal tax burden in tax class V. The planned reform is associated with several pitfalls. We present the expected reform effects on tax revenues and income distribution, which we calculate using a microsimulation model. We then discuss possible difficulties associated with the reform’s implementation, in particular those concerning individuals employed less than 12 months and sole earners.
Source: Wirtschaftsdienst
DOI: 10.2478/wd-2024-0143
Language: English
Topic: Economic and Fiscal Studies
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,760
OpenAlex ID: W4401620932