TY - JOUR

T1 - Income Tax Compliance Costs of Working Individuals

T2 - Empirical Evidence from Germany

AU - Blaufus, Kay

AU - Eichfelder, Sebastian

AU - Hundsdoerfer, Jochen

N1 - Funding Information: In our contribution, we analyze the time effort and the monetary expenses of German self-employed persons and wage earners resulting from the personal income tax. Our investigation is based on survey information raised between December 2008 and April 2009 within a project that was funded by the German Ministry of Finance. The data include cost estimates as well as socioeconomic information on private taxpayers and allow us to approximate the aggregate income tax compliance burden of German households. Furthermore, we investigate for the first time the key cost drivers of the compliance burden in Germany.

PY - 2014/11

Y1 - 2014/11

N2 - We analyze the compliance costs of individual taxpayers resulting from the German income tax (tax year 2007). Using survey data that have been raised between December 2008 and April 2009, we find evidence for a considerably higher cost burden of self-employed taxpayers. Taxable income and a higher education (university degree) are positively correlated with compliance costs, while the time effort of female taxpayers is significantly lower. By contrast, joint filing of married couples reduces the burden of tax compliance. The aggregate cost estimate of German income taxpayers amounts to €6 to €9 billion, respectively, 3.1 to 4.7 percent of the income tax revenue in 2007. This estimate is higher than latest projections in a number of other European countries like Spain and Sweden, but lower than estimates for the United States and Australia.

AB - We analyze the compliance costs of individual taxpayers resulting from the German income tax (tax year 2007). Using survey data that have been raised between December 2008 and April 2009, we find evidence for a considerably higher cost burden of self-employed taxpayers. Taxable income and a higher education (university degree) are positively correlated with compliance costs, while the time effort of female taxpayers is significantly lower. By contrast, joint filing of married couples reduces the burden of tax compliance. The aggregate cost estimate of German income taxpayers amounts to €6 to €9 billion, respectively, 3.1 to 4.7 percent of the income tax revenue in 2007. This estimate is higher than latest projections in a number of other European countries like Spain and Sweden, but lower than estimates for the United States and Australia.

KW - compliance burden

KW - personal income tax

KW - tax complexity

KW - tax compliance costs

UR - http://www.scopus.com/inward/record.url?scp=84911963063&partnerID=8YFLogxK

U2 - 10.1177/1091142113488162

DO - 10.1177/1091142113488162

M3 - Article

AN - SCOPUS:84911963063

VL - 42

SP - 800

EP - 829

JO - Public Finance Review

JF - Public Finance Review

SN - 1091-1421

IS - 6

ER -