Our microsimulation model for business taxation is used to forecast the corporate and commercial tax revenues in Germany. It allows us to both simulate the actual tax legislation and to evaluate the impacts of planned legislation amendments. Apart from the mere change in tax revenues, distributive consequences of the reform can also be reenacted in detail. Hence, we can judge which industries would be advantaged or disadvantaged by a reform.
Technically, the model is based on corporate and commercial tax statistics that MIKMOD received from the Federal Statistical Office in Germany (Statistisches Bundesamt). First, the data sets are prepared with the help of statistical computer programs and merged to a single data set. Second, the data are updated in a relatively complex process to illustrate both economic development and structural change in Germany. During the actual simulation the tax debt under the basis and alternative scenarios is computed for every single of the 3 million data points. The final aggregation of these results gives the total tax debt and hence the total effects of the proposed reform.