Abstract
Under inflationary conditions non-adjustment of progressive income tax schedules gives rise to “cold progression”. A criterion is established from which one can infer whether non-adjustment reduces or increases risk-taking. In many cases, for instance in the case of Germany’s current income tax, risk-taking is reduced. Among the different adjustment alternatives only the canonical adjustment procedure based on the consumer price index turns out to be neutral with respect to risk-taking.
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Bamberg, G. (1994). Risk-Taking Behavior and Inflation Adjustment of Personal Income Taxes. In: Eichhorn, W. (eds) Models and Measurement of Welfare and Inequality. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-79037-9_13
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DOI: https://doi.org/10.1007/978-3-642-79037-9_13
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