Short Expert Report on Germanys Tax Competitiveness in Light of Current Tax Policy Demands

Short Expert Report on Germanys Tax Competitiveness in Light of Current Tax Policy Demands

In view of the upcoming federal election in September 2021, there are increasing calls for tax reforms in Germany. For instance, the parties Die Linke, SPD and Bündnis 90/Die Grünen are in favor of (re)introducing a wealth tax. In addition, an increase in the corporate income tax rate (Die Linke), the abolition of the final withholding tax on capital income (Die Linke, Bündnis 90/Die Grünen), the complete abolition of the solidarity surcharge (FDP, CDU/CSU) and a reform of the trade tax (Die Linke) are also being discussed. These measures can have far-reaching consequences for the tax burden at company and shareholder level and can distort financing and investment decisions. In an international context, they could ultimately have a lasting impact on Germany's attractiveness as a tax location. Besides Germany, other important competitor countries are also planning tax reforms. In the United States, President Biden proposes various tax measures to refinance the costs of the COVID19 pandemic, such as an increase in the corporate income tax rate to 28% and an increase in the income tax rate for the top-income earners. The United Kingdom is also planning to increase the corporate income tax rate from April 2023. The aim of this project is to critically analyze the current tax policy demands of the parties represented in the German Bundestag. To this end, the reform options under discussion will first be presented and discussed. Subsequently, the effects of the reform proposals on the effective tax burden will be quantified. Finally, the results will be placed in an international comparison of tax burdens in order to show the implications of the reform proposals for Germany's tax attractiveness.

Project members

Barbara Stage

Barbara Stage

Project Coordinator
Junior Research Associate

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Verena Dutt

Verena Dutt

Researcher

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Christoph Spengel

Christoph Spengel

Research Associate

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Client/Allowance

Contact

Junior Research Associate
Dr. Barbara Stage
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