Christina Elschner

A Simulation Method to Measure the Tax Burden on Highly Skilled Manpower

A model is presented for simulating the tax burden on highly skilled manpower. The effective average tax rate, defined as the relative wedge between total remuneration and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent benefit are taken into account. The compensation package consists of cash payments and old-age provision. To integrate retirement benefits and their tax treatment, an inter-temporal approach is used. The results indicate that Germany and France have higher tax burdens than the UK and the USA, that Germany grants the strongest tax relief for families, and that occupational pension plans are favourable in all countries.

The Effective Tax Burden of Companies and on Highly Skilled Manpower: Tax Policy Strategies in a Globalized Economy

Company taxes and taxes on highly skilled labour both influence the attractiveness of a particular region as a location for investment. We measure the effective tax burden on capital investment and on highly qualified labour in 33 locations across Europe and the United States. We then correlate both types of tax burden in order to study the different tax policy strategies applied in different countries. We identify three causes for different strategies: political institutions, preferences for redistribution and equality, and the position in globalisation and growth. Small countries, high growth rates, and federal structure with high tax autonomy stand for countries with lower tax burdens, especially on companies. Large countries, representative democracies with coalitions, and a high preference for redistribution are likely to induce higher tax burdens.

Besteuerungsprinzipien und effektive Unternehmenssteuerbelastungen in der Europäischen Union: Regelt sich die EU-weite Steuerharmonisierung von selbst?

Abstract EU law demands that the allocation of factors and goods within the European Union shall not be distorted by taxes. Efforts to formally harmonize corporate tax regimes in Europe have, however, stalled in recent years. What is more, the source principle has prevailed over residence based taxation which is seen to be more in line with EU law. Tax induced distortions of cross-border investment decisions are supposed to be the consequence. Based on country-specific effective average tax rates from 1998 to 2009, this article shows that there is, however, non-coordinated convergence of tax burdens within the EU. Thus, distortions of cross-border investment decisions are limited and decreasing even without formal harmonization.

A Simulation Method to Measure the Effective Tax Rate on Highly Skilled Labor

A model is presented for simulating the level of taxes imposed on highly skilled labor. The effective average tax rate, defined as the relative wedge between employment costs and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent benefit are taken into account. The compensation package consists of cash payments and old-age provision. To integrate retirement benefits and their tax treatment, an intertemporal approach is used. The results indicate a wide dispersion of effective tax rates across Europe and the U.S. Slovakia, Switzerland and the U.S. taxhighly skilled labor at a low rate. Scandinavian countries, Belgium, and Slovenia turn out to be high-tax countries.

The impact of R&D tax incentives on R&D costs and income tax burden

We analyse R&D tax incentives in a detailed way considering a multi-period setting and economic assumptions which reflect a realistic economic environment. We measure the incentives impact on the firms total tax payments and the R&D cost by means of the simulation model European Tax Analyzer. Using different economic settings and model firms, we run sensitivity analyses and get by that a more detailed view on the effects from R&D tax incentives against the background of the framing tax system. We find that not so much the kind but rather the specific design of R&D tax incentives, the interplay with the framing tax system and the firms profitability relative to the level of R&D expenditures heavily influence the amount of tax subsidy for R&D.

Fiskalische Kosten einer steuerlichen Förderung von Forschung und Entwicklung in Deutschland — Eine empirische Analyse verschiedener Gestaltungsoptionen

ZusammenfassungDer Beitrag berechnet die Aufkommensausfälle verschiedener Gestaltungsmodelle für eine steuerliche Forschungsförderung in Deutschland auf Basis eines Mikrosimulationsmodells. Die fiskalischen Kosten betragen zwischen 464 Mio. EUR und 5.701 Mio. EUR. Die Ergebnisse zeigen, dass eine Erstattungsoption der Steuergutschrift bei ertragsschwachen Unternehmen unerlässlich ist, um Verzerrungen zu vermeiden. Eine Differenzierung der Fördersätze nach Unternehmensgröße kann die Aufkommensausfälle wirksam begrenzen. Als besonders überlegenswert erscheint eine Verrechnung der Steuergutschrift mit der abzuführenden Lohnsteuer.AbstractBased on a microsimulation approach we determine the revenue implications of alternative tax credits for research and development (R&D) in Germany. According to the simulations we carried out, the effects on fiscal revenue of the discussed incentives would range between 464 million and 5,701 million EUR. As a result, the refund option for the tax credit on corporate tax and on business tax is vital, as otherwise one third of the corporations would not or only partially benefit from the incentive effect, resulting in severe distortion between profitable and non-profitable companies. Variation in the level of support for SMEs and large companies can effectively limit the revenue effects. A pragmatic design could be the settlement of the tax credit with wage withholding.

The Revenue Costs of Possible R&D Tax Incentives in Germany - An Empirical Analysis of Several Options (Fiskalische Kosten einer Steuerlichen Förderung von Forschung und Entwicklung in Deutschland - Eine Empirische Analyse Verschiedener Gestaltungsoptionen) (German)

Non-technical summary: The coalition agreement of the new German government includes the plan to introduce tax incentives for research and development. Several different types of tax incentives are currently under discussion, particularly a support in the form of a tax credit on R & D expenses.Proposals for the design of such incentives are out so far but – to our knowledge – only few estimates of the fiscal costs of the various alternative support schemes have been made. This contribution closes the gap by quantifying the fiscal costs of selected alternative R & D tax incentives with the help of the micro-simulation model ZEW Tax-CoMM. We focus on first-order effects without adaption of behaviour of the participants.According to the simulations we carried out, the effects on fiscal revenue of the discussed incentives would be between 464 million and € 5,701 million €. As a result, the refund option for the tax credit on corporate tax and on business tax is vital, as otherwise a third of the corporations would not or only partially benefit from the incentive effect, resulting in severe distortion between profitable and non-profitable companies. Variation in the level of support for SMEs and large companies can effectively limit the revenue effects. A two-division of the rate of support for SMEs in 12% and 4% for large companies, both on R&D staff costs, leads to a significantly reduced revenue effect of € 1,060 million. If the funding rate for SMEs is increased to 25% while it remains at 4% for non-SMEs, the result is a volume effect of € 1,308 million. The results recommend abandoning the idea of a cap for the tax credit equal to an absolute value as severe distortions among large corporations could occur. An especially pragmatic design could be the settlement of the tax credit with wage withholding. In this case, the refund option would be dispensable and the resulting monthly payment would also have a very timely liquidity impact for the company.Das Wichtigste in Kurze: Der Koalitionsvertrag der neuen Bundesregierung enthalt eine Absichtserklarung, dass die Einfuhrung einer steuerlichen Forderung von Forschung und Entwicklung angestrebt wird. Mehrere unterschiedliche Arten von Steueranreizen sind derzeit in der Diskussion, insbesondere eine Forderung in Form einer Steuergutschrift steht im Raume. Uber Vorschlage zur Gestaltung eines solchen Anreizes hinaus sind aber bisher – soweit bekannt – kaum Abschatzungen zu den fiskalischen Kosten der verschiedenen alternativen Forderinstrumente unternommen worden. Dieser Beitrag will die Lucke schliesen, indem er die fiskalischen Kosten ausgewahlter alternativer steuerlicher FuEAnreize mit Hilfe des Mikrosimulationsmodells ZEW TaxCoMM quantifiziert. Hierbei werden sogenannte Erstrundeneffekte berucksichtigt. Es ergeben sich in den durchgefuhrten Modellrechnungen fiskalische Aufkommensausfalle zwischen 464 Mio. € und 5.701 Mio. €. Eine Erstattungsoption der Steuergutschrift uber die Gewerbe- und Korperschaftsteuerschuld hinaus ist unerlasslich, da sonst etwa ein Drittel der Unternehmen nicht oder nur teilweise in den Genuss der Forderung kommen wurde und sich dadurch starke Verzerrungen zwischen ertragsstarken und ertragsschwachen Unternehmen ergeben. Eine Differenzierung der Fordersatze fur KMU und grose Unternehmen kann die Aufkommensausfalle wirksam begrenzen. Eine Zweiteilung des Fordersatzes in 12 % fur KMU und 4% fur grose Unternehmen, jeweils auf Personalaufwendungen, fuhrt zu einem deutlich reduzierten Aufkommenseffekt von 1.060 Mio. €. Wird der Fordersatz fur KMU auf 25% erhoht wahrend er bei Nicht-KMU bei 4% bleibt, ergibt sich ein Aufkommenseffekt von 1.308 Mio. €. Eine Kappungsgrenze in Hohe eines absoluten Betrages ist wegen der Verzerrungen innerhalb der Gruppe groser Unternehmen ungunstig. Als besonders pragmatisch erscheint eine Verrechnung der Steuergutschrift mit der abzufuhrenden Lohnsteuer. In diesem Fall konnte zudem auf eine Erstattungsoption verzichtet werden und durch die monatliche Zahlungswirkung wurde sich zudem eine sehr zeitnahe Liquiditatswirkung fur die Unternehmen ergeben.