It is often feared that tax competition might lead to a “race to the bottom”. The consequence of a decline of tax rates on capital income would be shrinking capital income tax revenues and difficulties for national governments to perform their usual tasks. The paper analyzes what happened to...

Facing the general election in 2013, the level of the income tax is a major issue of the economic policy debate in Germany. The paper presents data on the income tax burden in the period 1958–2012. The data refer to specific levels of real income as well as to specific levels of income in...

It is argued that the German system of supporting low wage income earners by government transfers gives incentives for employers and employees to contract low wages and then to exploit the government. The paper analyses if such incentives do exist. It turns out that this is the case under...

Based on a description of the German system of taxes and transfers, the incentives to work are analyzed for several groups of the labor force. The effects of the “Hartz IV” reform (effective from 2005 onwards) on the incentives receive particular attention. It turns out that the marginal...

The tax burden of typical wage income earners in Germany is analyzed. It turns out that the overall tax rate (wage income tax, solidarity surcharge, contributions to social security) for selected singles will go up in the period 2013–2017 if the tax rules will not be changed. The main reason...

The income tax rate structure introduced in 2007 was changed in 2009. The income tax rates will be lowered in 2010, too. The effects on the wage income tax revenues and on the incentives to work are analyzed. It turns out that “bracket creep” will remain a problem in Germany

In many countries, fiscal policy became strongly expansionary in order to fight the recession. Structural budget deficits increased sharply and might remain high after the end of the recession. This would raise real interest rates and would impair economic growth. Some measures to reduce the...

The paper includes data on the taxation of wage income (labor income tax and contributions to social security) and capital income in the Federal Republic of Germany. Average tax rates and marginal tax rates for typical wage income earners are shown for the 1977–1999 period; average tax rates...

Der Abstand zwischen dem potentiellen Nettoarbeitseinkommen und dem Sozialhilfeanspruch (Lohnabstand) wird für verschiedene Haushaltstypen gemessen. Er ist im Jahr 2001 für Haushalte, die aus drei oder mehr Personen bestehen, gering. Der Lohnabstand hat in den vergangenen 40 Jahren abgenommen....

Subsidization policy is intensively discussed in Germany. Subsidies comprise by definition tax expenditures and those government expenditures which distort the structure of the economy; financial aid is granted to different branches by the EU, the federal government, the states (Länder) and the...