Documentation FiFoSiM: Integrated tax benefit microsimulation

This paper describes FiFoSiM, the integrated tax benefit microsimulation and CGE model of the Center of Public Economics at the University of Cologne. FiFoSiM consists of three main parts. The first part is a static tax benefit microsimulation module. The second part adds a behavioural component to the model: an econometrically estimated labour supply model. The third module is a CGE model which allows the user of FiFoSiM to assess the global economic effects of policy measures. Two specific features distinguish FiFoSiM from other tax benefit models: First, the simultaneous use of two databases for the tax benefit module and second, the linkage of the tax benefit model to a CGE model. --FiFoSiM,microsimulation,CGE

Documentation FiFoSiM: integrated tax benefit microsimulation and CGE model

This documentation describes FiFoSiM, the integrated tax benefit microsimulation and CGE model of the Center of Public Economics at the University of Cologne. FiFoSiM consists of three main parts. The first part is a static tax benefit microsimulation module. The second part adds a behavioural component to the model: an econometricaly estimated labour supply model. The third module is a CGE model which allows the user of FiFoSiM to assess the global economic e¤ects of policy measures. Two specific features distinguish FiFoSiM from other tax benefit models. First, the simultaneous use of two databases for the tax benefit module and second, the linkage of the tax benefit model to a CGE model. --FiFoSiM,microsimulation,CGE

Wie progressiv ist Deutschland?: Das Steuer- und Transfersystem im europäischen Vergleich

When comparing tax benefit systems across Europe, Germany is usually regarded as a country with a high level of taxes and contributions which is often seen as a main challenge for the economic performance of the welfare state in terms of growth and unemployment. Especially the progressive structure of the German income tax is subject to various criticisms in the ongoing policy debate in Germany. In this paper, we compare the progressivity and redistribution induced by the tax benefit systems in the EU-15 countries. In contrast to previous studies, we do not focus only on the income tax system but additionally consider social insurance contributions and cash benefits for a complete analysis of the whole tax benefit system. Our analysis is based on EUROMOD, a static tax benefit microsimulation model for the EU-15 countries, which allows analysing the tax benefit systems in a common framework. We compute several measures of progressivity and redistribution for the whole tax benefit system as well as for the single components. We compare the values of these measures across countries to rank the countries according to their progressivity and level of redistribution. Our analysis shows that there is considerable variety with respect to progressivity and redistribution across the countries. We show that the German system as a whole employs only a medium level of redistribution, which contradicts to some extent the existing German literature. However, this effect can be decomposed into a highly progressive income tax system, a highly unequal pre-tax income distribution and regressive social insurance contributions as well as regressive transfers. Therefore, when thinking of reforming the highly progressive income tax system, one has to take into account the regressive effects of the other elements of the tax benefit system. Deutschland wird häufig ein im europäischen Vergleich überdurchschnittliches Abgabenniveau bescheinigt. Da dies als eine der Hauptursachen für vergleichsweise schwaches Wachstum und hohe Arbeitslosigkeit gilt, werden in der wirtschaftspolitischen Debatte vermehrt Reformen des progressiven Steuer- und Transfersystems gefordert. Im Zentrum unserer Untersuchung steht die Frage, welche Unterschiede die Steuer- und Transfersysteme in den europäischen Ländern hinsichtlich ihrer Progressivität aufweisen und welche Wirkungen auf die Verteilung der Einkommen darauf zurückzuführen sind. Die Analyse zeigt, dass Deutschland im europäischen Vergleich insgesamt eher im mittleren Bereich anzusiedeln ist. Gleichwohl kann der deutschen Einkommensteuer eine relativ hohe Umverteilungswirkung bescheinigt werden, die jedoch auf eine vergleichsweise hohe Ungleichheit der Markteinkommen zurückführen ist. Gleichzeitig geht von den stark regressiv wirkenden Sozialversicherungsbeiträgen eine relativ hohe Belastung aus.Progression, Umverteilung, Steuer- und Transfersystem, europäischer Vergleich

FiFoSiM - an integrated tax benefit microsimulation and CGE model for Germany

This paper describes FiFoSiM, the integrated tax benefit microsimulation and computable general equilibrium (CGE) model of the Center of Public Economics at the University of Cologne. FiFoSiM consists of three main parts. The first part is a static tax benefit microsimulation module. The second part adds a behavioural component to the model; an econometrically estimated labour supply model. The third module is a CGE model which allows the user of FiFoSiM to assess the global economic effects of policy measures. Two specific features distinguish FiFoSiM from other tax benefit models: First, the simultaneous use of two databases for the tax benefit module and second, the linkage of the tax benefit model to a CGE model.FiFoSiM; microsimulation; CGE

Extension of the Color Glass Condensate Approach to Diffractive Reactions

We present an evolution equation for the Bjorken x dependence of diffractive dissociation on hadrons and nuclei at high energies. We extend the formulation of Kovchegov and Levin by relaxing the factorization assumption used there. The formulation is based on a technique used by Weigert to describe interjet energy flow. The method can be naturally extended to other exclusive observables

Measuring Richness and Poverty

In this paper, we define a new class of richness measures. In contrast to the often used headcount, these new measures are sensitive to changes in rich person's income and therefore allow for a more sophisticated analysis of richness. We demonstrate the application of these new measures to analyse the development of poverty and richness over time in Germany, to compare Germany to the other EU-15 countries and to investigate the impact of tax reforms on poverty and richness. The latter analysis is based on micro data provided by the simulation model FiFoSiM using German income tax and household survey micro data. We show that it partly depends on the measure whether the development of richness in Germany is increasing or decreasing. The cross country analysis yields several groups of countries according to their values of poverty and richness indices. The new richness measures show that the effects of flat tax reform scenarios depend on the reform parameters. Using these examples, we show the importance of taking into account the dimension of changes and not only the number of people beyond a given richness line (headcount). We propose to use the new measures in addition to the headcount index for a more comprehensive analysis of richness. --richness,affluence,poverty,tax reform,flat tax

Does tax simplification yield more equity and efficiency? An empirical analysis for Germany

This paper investigates the impact of tax simplification on various indicators of the efficiency of the tax system and on the distribution of income. The analysis is based on a simulation model (FiFoSiM) using German income tax and household survey microdata. We model tax simplification as the abolition of a set of deductions from the tax base included in the German income tax system. We find that this form of tax base simplification leads to a reduction in the use of professional tax advice, a more equitable income distribution and an increase in tax revenue. If these measures are combined with a reduction of income tax rates to preserve revenue neutrality, the effects depend on the type of rate schedule adjustment. The combination with a flat rate tax implies redistribution in favour of very high incomes, and an overall increase in income inequality. Efficiency effects in terms of changes in marginal tax rates and labor supply effects are mixed. The combination with a rate schedule adjustment which preserves the directly progressive rate schedule yields a tax reform which reduces the inequality of after tax incomes. We conclude that tax simplification may improve the efficiency of the tax system without increasing inequality of after tax income. --Income distribution,polarisation,tax simplification,flat tax