Research

Ongoing research projects.

Work in Progress

Political parties, reform proposals, and revealed redistributive preferences
with Maximilian Blömer, Lilly Fischer, Emanuel Hansen and Andreas Peichl

Abstract This paper provides a systematic analysis of political parties' proposals to reform the German tax-transfer system. We cover all 242 proposals by Germany's five largest parties in federal election campaigns between 2005 and 2025, and simulate their direct and indirect effects on net government revenue. In a first step, we investigate how these proposals differ in terms of beneficiaries and cost-effectiveness as measured by the Marginal Value of Public Funds (MVPF). We then exploit this information to elicit the parties' revealed preferences for redistribution. We find that, first, all parties propose similarly cost-effective reforms with MVPFs between 0.5 and 1.5, but differ in terms of reform types, directions, and beneficiaries. Second, the policy proposals of all parties reveal some preferences for redistribution from the rich to the poor, but the strength of these preferences differ systematically. Third, the redistributive preferences of moderate parties converge over time, consistent with platform adjustments in response to a growing pressure by populist challengers.

Designing redistribution with endogenous transfer take-up
with Spencer Bastani and Emanuel Hansen

Abstract The existing literature on optimal income taxation ignores that, across the world, redistribution towards the poor mainly happens via welfare transfers with take-up rates that are endogenous and far below $100\%$. This paper provides the first comprehensive analysis of tax-transfer systems that are composed of mandatory income taxes and optional transfer programs. We develop a theoretical model that allows for heterogeneity in labor productivity and take-up costs and accounts for behavioral responses at the take-up margin as well as the intensive and extensive margin of labor supply. We use this model to derive empirically applicable formulas that specify (i) conditions for the existence of Pareto-improving reforms of taxes, transfers, or both, (ii) the inverse optimum weights of transfer recipients and non-recipients that would make an observed safety net optimal, and (iii) the optimal base transfer to non-working recipients as well as optimal tax rates and transfer phase-out rates. We apply these formulas to investigate the German tax-transfer system and find that the German safety net is inefficient: There exist transfer reforms that would allow to make all recipients better off while generating a net surplus for the government. In ongoing work, we add an investigation of the Swedish safety net.

Beliefs about behavioral responses to income taxation
with Lilly Fischer

Abstract This project is motivated by the fact that the analysis of politically feasible reforms and inverse-optimum approaches rely on reduced-form estimates of the elasticity of taxable income (ETI), while their necessary input parameter would rather be the population's beliefs about behavioral responses to taxation. This project examines citizens' perceived behavioral responses to income taxation and explores their impact on policy support. We argue that survey questions on tax reforms' behavioral revenue effect as compared to their mechanical revenue effect are key to quantify individuals' beliefs. We translate these tax revenue beliefs into elasticities of taxable income (ETI) using a simple labor supply model. This can, under some assumptions, provide a sufficient statistic for ETI beliefs. Our pilot results reveal strong heterogeneity in individual beliefs, although average perceptions align with reduced-form ETI estimates. Correlating these results with household characteristics, we find that right-leaning respondents tend to believe in higher ETIs. In the next steps, we plan to explore how these findings impact policy support and existing public finance results.

Welfare effects of providing pension subsidies to low-income pensioners