Benefits and problems of linking micro and macro models – evidence from a flat tax analysis

Author

Publication Date

Jan 2009

Abstract

The aim of this paper is to describe the state-of-the-art in simulation and to illustrate benefits and problems of linking micro and macro models by analysing flat tax proposals for Germany. The analysis shows that a personal income flat tax can indeed overcome the fundamental equity efficiency trade-off while simultaneously increasing the tax revenue. However, this result does not hold for a flat tax combining a personal income flat tax with a corporate cash flow flat tax, even when allowing for an ex-post loss in revenue as the top of the distribution still gains the most.

Publication type

ISER Working Paper Series

Series Number

2009-02

Links

http://www.iser.essex.ac.uk/publications/working-papers/iser/2009-02 - http://www.iser.essex.ac.uk/publications/working-papers/iser/2009-02

Notes

working paper

Cid:511996

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