02188cas a2200241 a 4500 AALejournalIMF000209 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451854213 1018-5941 BD-DhAAL BD-DhAAL Thimann, Christian. Effective Taxation for Recipients of Social Assistance in Germany and the Consequences of the 1996 Tax Reform / Christian Thimann. Washington, D.C. : International Monetary Fund, 1995. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper explores the problem of effective taxation at the lower end of the income scale in Germany. For the recipients of social income maintenance--currently about 1.8 million nationals--effective taxation consists not only of the explicit taxation through the tax code but also of the implicit taxation through the withdrawal of benefits. The paper calculates effective tax rates for recipients of social assistance; it is shown that for labor incomes in the lower income range explicit and implicit taxation add up to a marginal burden of just under 75 percent on average. The 1996 tax reform alleviates the explicit tax burden on low incomes, but it does not alleviate the total marginal burden on labor earnings of welfare recipients. It increases net incomes, but since the withdrawal of benefits increases with net incomes, too, the overall burden remains practically unchanged. Therefore, effective welfare traps remain prevalent; these could only be avoided through a reform of the system of social assistance and withdrawal. Constraints and possible steps for reform are discussed. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1995/120 Full text available on IMF http://elibrary.imf.org/view/journals/001/1995/120/001.1995.issue-120-en.xml IMF e-Library