The Taxation of Families: How Gendered (De)Familialization Tax Policies Modify Horizontal Income Inequality

Schechtl, Manuel

doi:10.1017/s0047279421000404

Cited by 13 publications

(12 citation statements)

References 39 publications

(7 reference statements)

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“… a http://www.coupleseurope.eu/ (last accessed 15/03/22) b https://data.oecd.org/pension/net-pension-replacement-rates.htm#indicator-chart (last accessed 15/03/22) c https://ec.europa.eu/eurostat/databrowser/view/ilc_pnp13/default/table?lang=en (last accessed 15/03/22) d Schechtl ( 2021 ) e Lersch and Dewilde ( 2015 ) f Mandatory choice between a separate property and community property regime g Marketisation of housing is high if the mortgage system is well developed, resulting in a more marketised provision of homeownership …”

Section: Individual Wealth Accumulation In Couples From a Life-course...mentioning

confidence: 99%

Wealth in Couples: Introduction to the Special Issue

2022

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The assumption that economic resources are equally shared within households has been found to be untenable for income but is still often upheld for wealth. In this introduction to the special issue “Wealth in Couples”, we argue that within-household inequality in wealth is a pertinent and under-researched area that is ripe for development. To this end, we outline the relevance of wealth for demographic research, making the distinction between individual and household wealth. Drawing on a life-course perspective, we discuss individual wealth accumulation within couples and its links to family-demographic processes, the institutional context, and norms on pooling and sharing. We conclude with a brief summary of the main findings from the special issue and highlight implications for demographic research and for future research in this field.

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Section: Individual Wealth Accumulation In Couples From a Life-course...mentioning

confidence: 99%

Wealth in Couples: Introduction to the Special Issue

2022

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“…Consequently, there are important relations between payroll taxation and income taxation for our understanding of inequality. As for many other countries, the German income tax system amplifies income differences between single-and equal-earning families (Schechtl 2021). It allows married couples to split their income after deduction of payroll taxes and to calculate the income tax on both parts separately (Bach et al 2011).…”

Section: Labor Income Inequality Payroll Taxation and Household Incomes 231 How Payroll Taxes Disperse Incomes Across The Distributionmentioning

confidence: 99%

“…A country's income tax system can also reinforce gender-specific and racial inequalities across the income distribution (O'Brien 2017;McCaffery 2007). Furthermore, some tax systems favor family types, such as the breadwinner model with children, relative to others, thereby increasing income inequality between families (Schechtl 2021).…”

Section: Introductionmentioning

confidence: 99%

Payroll-exempt labor incomes increase inequality at the top

Haupt¹,

Nollmann²

2021

Preprint

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In recent decades, inequality of household income has increased globally. A common trend is increased income inequality at the top of the distribution. The sources of this trend are a matter of debate. Increased demand for analytical and managerial skills is said to have strongly increased labor incomes at the top. Other scholars have indicated that structural conditions, such as financialization or favorable taxation, have benefited top-earning households. Here, we contribute to the latter line of reasoning. We show that payroll taxation reinforces income inequality at the top. Such taxation has large fiscal volume and redistributive power. However, our knowledge about the distributional consequences of payroll taxation as a tax scheme is remarkably thin. We claim that payroll taxes are central to understanding income inequality. Many countries, such as Germany and the US, restrict payroll taxes to a maximum amount, resulting in significant payroll tax-exempted incomes for high-earning households. Strongly growing top-labor incomes thus lead to increased payroll tax-exempted incomes for households at the upper parts of the distribution and, consequently, to higher income dispersion. We use Germany (1992–2017), a highly redistributive country, as a case study. Our empirical results suggest that: a) households increasingly profit from payroll-exempted labor incomes across the upper quarter; b) this benefit has increased over time; and c) increased amounts of payroll tax-exempted labor income explain up to 60% of income dispersion at the top of the distribution. We discuss the generalizability of our case study for other countries.

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“…Consequently, there are important relations between payroll taxation and income taxation for our understanding of inequality. As for many other countries, the German income tax system amplifies income differences between single-and equal-earning families (Schechtl 2021). It allows married couples to split their income after the deduction of payroll taxes and to calculate the income tax on both parts separately (Bach et al 2011).…”

Section: How Payroll Taxes Disperse Incomes Across the Distributionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Payroll-Exempt Labor Incomes Increase Inequality at the Top

Haupt

Nollmann

2021

Social Forces

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In recent decades, the inequality of household income has increased globally. A common trend is increased income inequality at the top of the distribution. The sources of this trend are a matter of debate. Increased demand for analytical and managerial skills is said to have strongly increased labor incomes at the top. Other scholars have indicated that structural conditions, such as financialization or favorable taxation, have benefited top-earning households. Here, we contribute to the latter line of reasoning. We show that payroll taxes exempt parts of high labor incomes, reinforcing income inequality at the top. Such taxation has large fiscal volume and redistributive power. However, our knowledge about the distributional consequences of payroll taxation as a tax scheme is remarkably thin. Many countries, such as Germany and the United States, restrict payroll taxes to a maximum amount, resulting in significant payroll tax–exempted incomes for high-earning households. Strongly growing top-labor incomes thus lead to increased payroll tax–exempted incomes for households at the upper parts of the distribution and, consequently, to higher income inequality. We use Germany (1992–2017), a highly redistributive country, as a case study. Our empirical results suggest that: (1) households increasingly profit from payroll-exempted labor incomes across the upper quarter; (2) this benefit has increased over time; and (3) increased amounts of payroll tax–exempted labor income explain up to 60 percent of income dispersion at the top of the distribution. We discuss the generalizability of our case study for other countries, especially the United States.

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The Taxation of Families: How Gendered (De)Familialization Tax Policies Modify Horizontal Income Inequality

Cited by 13 publications

References 39 publications

Wealth in Couples: Introduction to the Special Issue

Wealth in Couples: Introduction to the Special Issue

Payroll-exempt labor incomes increase inequality at the top

Payroll-Exempt Labor Incomes Increase Inequality at the Top

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