Dominik Sachs
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Prof. Dr.
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Sachs
First name
Dominik
Email
dominik.sachs@unisg.ch
Phone
+41 71 224 3513

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  • Publication
    Who should bear the burden of COVID-19 related fiscal pressure? An optimal income taxation perspective
    ( 2023)
    Ayaz, Mehmet
    ;
    Lea Fricke
    ;
    Fuest, Clemens
    ;
    Sachs, Dominik
    The COVID-19 pandemic has led to an increase in public debt in most countries, and the Ukraine war is likely to have similar effects. This will increase fiscal pressure in the future. We study how the shape of the optimal nonlinear income tax schedule is affected by this increase. We calibrate the workhorse optimal income tax model to five European countries: France, Germany, Italy, Spain and the UK. Applying an inverse-optimum approach to the pre COVID-19 economies we obtain the Pareto weights implicitly applied by the different countries. We then ask how the schedule of marginal and average tax rates should be optimally adjusted to the increase in fiscal pressure. For all countries, we find that the increase in fiscal pressure leads to a less progressive optimal tax schedule both in terms of marginal and average tax rates.
    Type: journal article
    Journal: European Economic Review
    Volume: 153
    URL: https://www.sciencedirect.com/science/article/pii/S0014292123000107
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/107856
  • Publication
    Pareto-improving reforms of tax deductions
    ( 2022)
    Koehne, Sebastian
    ;
    Sachs, Dominik
    We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule for marginal deductions along the income distribution. An immediate implication is a recipe for designing Pareto-improving reforms. We apply our theory and simulate a Pareto-improving reform that introduces deductions for non-care household services (housekeeping, gardening, laundry) in the United States. The reform combines marginal deduction rates for household services between 55% and 85% with a slight increase in marginal tax rates.
    Type: journal article
    Journal: European Economic Review
    Volume: 148
    URL: https://www.sciencedirect.com/science/article/pii/S0014292122001234
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/109401
  • Publication
    Education and optimal dynamic taxation: The role of income-contingent student loans
    ( 2016)
    Findeisen, Sebastian
    ;
    Sachs, Dominik
    We study the optimal design of integrated education finance and tax systems. The distribution of wages is endogenously determined by the costly education decisions of heterogeneous individuals before labor market entry. Consistent with empirical evidence, this human capital investment decision is risky. We find that an integrated education and tax system in which the government provides education loans to young individuals coupled with income-contingent repayment can always be designed in a Pareto optimal way. We present a simple empirically driven application of the framework to US data in which individuals make a college entry decision. We find the optimal repayment schemes for college loans can be well approximated by a schedule that is linearly increasing in income up to a threshold and constant afterwards. So although the full optimum could lead to complicated non-linear schedules in theory, very simple instruments can replicate it fairly well. The welfare gains from income-contingent repayment are significant.
    Type: journal article
    Journal: Journal of Public Economics
    Volume: 138
    URL: https://www.sciencedirect.com/science/article/pii/S0047272716300159
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/105076