The Effect of Inflation on Real Taxation (Der Einfluss Der Inflation Auf Die Reale Besteuerung Von Einkommen)
16 Pages Posted: 7 May 2009 Last revised: 3 Jun 2009
Date Written: April 2009
In this paper the effect of inflation on the real taxation of income in Germany is analyzed. The results show that the effect of inflation on real marginal tax rates is quantitatively strong. As a consequence, ex ante real tax rates become stochastic. However, the effect differs between labor and capital income. It is shown how taxation formulas can be changed in order to avoid these effects.
Note: Downloadable document is in German.
Keywords: Inflation, Real Taxation, Abgeltungsteuer, Kalte Progression
JEL Classification: H22, H24, H26
Suggested Citation: Suggested Citation