Titelaufnahme

Titel
Bracket creeps : bane or boon for the stability of numerical budget rules? / Martin Altemeyer-Bartscher, Götz Zeddies
VerfasserAltemeyer-Bartscher, Martin ; Zeddies, Götz
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH), November 2016
Umfang1 Online-Ressource (III, 29 Seiten = 0,66 MB) : Diagramme
SpracheEnglisch
SerieIWH-Diskussionspapiere ; no. 29/2016
URNurn:nbn:de:gbv:3:2-66059 
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Bracket creeps [0.66 mb]
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As taxpayers typically pay relatively low attention to a small inflation-induced bracket creep of the income tax, policy-makers tend to postpone its correction into the future. However, the fiscal illusion fades away and political pressure for a tax relief arises since after some years, the cumulative increase of the average tax rate exceeds a critical threshold. Using Germany as an example, this paper shows that bracket creeps can provoke revenue cycles in public budgets hindering governments‘ compliance with the numerical budget rules. An indexation of the tax tariff, which provides an automatic correction of the bracket creep could prevent such fluctuations and thus provides a favorable framework for the debt rule.