Tax Non-Filing and Limited Redistribution

When tax-ling is optional for employees, this may have unintended consequences on the effective tax rates. Based on administrative data from Germany, we characterize non-ling taxpayers and show that, though non-ling exists over the entire income distribution, it is especially prevalent at low income...

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Bibliographic Details
Published in:Proceedings (Conference on Taxation) 2020-01, Vol.113, p.1-54
Main Authors: Haucky, Tobias, Wallossek, Luisa
Format: Article
Language:English
Subjects:
Nonfiling & Expanding the Tax Net
Online Access:Get full text
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Summary:When tax-ling is optional for employees, this may have unintended consequences on the effective tax rates. Based on administrative data from Germany, we characterize non-ling taxpayers and show that, though non-ling exists over the entire income distribution, it is especially prevalent at low income levels. As a result, the progressivity of the income tax schedule is attenuated. On average, low income earners over-remit taxes relative to the statutory schedule while higher incomes reduce their tax burden through filing. Tax non-ling is substantial in monetary terms: German non-filers over-remit at least 603 million € (949 million €) in personal income tax in 2010 (2014).
ISSN:1549-7542
2377-5661