Optional (non-)filing and effective taxation

Hauck, Tobias und Wallossek, Luisa (2024): Optional (non-)filing and effective taxation. In: Journal of Public Economics, Bd. 238, 105187

Abstract

Many countries have automatic wage tax withholding systems with tax non-filing options for some taxpayers. We show that this has sizable and potentially unintended implications for effective taxation because taxes are often over-withheld. Low-income taxpayers pay more taxes than they have to because they frequently do not file. Using German administrative tax data, we document that the average non-filer overpays € 119 in one year, equivalent to a percentage point increase in the average tax rate. Non-filing acts as a form of “reverse evasion”: It weakens the effective tax progressivity by increasing tax rates at the bottom of the income distribution.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• ISSN: 00472727
• Sprache: Englisch