Income Taxation and Household Size: Would French Family Splitting Make German Families Better Off?

41 Pages Posted: 13 Jan 2006

See all articles by alexandre baclet

alexandre baclet

National Institute of Statistics and Economic Studies (INSEE)

Fabien Dell

German Institute for Economic Research (DIW Berlin)

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research

Date Written: December 2005

Abstract

In this paper, we address the question whether family support via the income tax system is more generous in France than in Germany, as it is often claimed in the public debate. We use two micro-data sets and a micro-simulation model to compare effective average tax rates for different household types in France and Germany. Our analysis shows that the popular belief that French high income families with children face lower average tax rates than their German counterparts is true, however not due to the French Family splitting but rather to the different definitions of taxable incomes in both countries. Actually, low income families with less than three children even fare better in terms of tax relief in Germany than in France. The French system leads to lower average tax rates than the German one (over a large range of the income distribution) only for families with three children.

Keywords: income taxation, family, income distribution, France, Germany

JEL Classification: D31, H24, J18

Suggested Citation

baclet, alexandre and Dell, Fabien and Wrohlich, Katharina, Income Taxation and Household Size: Would French Family Splitting Make German Families Better Off? (December 2005). IZA Discussion Paper No. 1894. Available at SSRN: https://ssrn.com/abstract=875403

Alexandre Baclet

National Institute of Statistics and Economic Studies (INSEE) ( email )

18, Boulevard Adolphe-Pinard
75675 Paris Cedex 14
France

Fabien Dell

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany
+49 30 8 978 9152 (Phone)

Katharina Wrohlich (Contact Author)

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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