Jörg Alt SJ Germany V: Laws governing tax & tax like contributions Simplified Version alt 27.07.2016 2 Table of Content Register of graphics ........................................................................................................ 4 Register of tables ............................................................................................................ 5 1 Legal basis and administrative structure .................................................................. 5 2 Taxes, Levies, Duties, mandatory Social Security Contributions............................ 6 3 Main categories of taxes .......................................................................................... 7 3.1 Taxation of income – sub categories ................................................................ 7 3.2 Taxation of wealth – sub categories ................................................................. 8 3.3 Taxation of turnover, consumption, goods and services – sub categories ....... 8 3.4 Research focus .................................................................................................. 8 4 International comparison ......................................................................................... 9 4.1 Tax and contribution ratio ................................................................................ 9 4.2 Comparison of individual categories of taxation ............................................ 10 4.3 Personal Income Tax (PIT) ............................................................................. 11 4.4 Corporation Income Tax (CIT) ....................................................................... 12 4.5 Wealth taxes (0verview) ................................................................................. 13 4.6 Comparing individual categories of wealth taxation ...................................... 13 4.6.1 Wealth Tax ................................................................................................ 13 4.6.2 Inheritance Tax ......................................................................................... 14 4.6.3 Real Property Tax ...............................Fehler! Textmarke nicht definiert. 4.7 Conclusion ...................................................................................................... 15 5 Discussion .............................................................................................................. 17 5.1 How progressive is the tax burden? ................................................................ 17 5.1.1 At first sight .............................................................................................. 17 5.1.2 A closer look ............................................................................................. 19 5.1.2.1 Middle Class ...................................................................................... 19 5.1.2.2 Shifts among income categories ........................................................ 20 5.1.2.3 Privileging income from capital ........................................................ 23 5.1.2.4 Nominal and effective tax burden ...................................................... 24 5.1.2.5 Different progressivity for low and top incomes ............................... 24 5.2 Progressive tax, SSCs, regressive VAT .......................................................... 25 5.2.1 The German system of social insurance ................................................... 25 5.2.2 Wage tax plus SSC contributions ............................................................. 26 5.2.3 Regressive character of the SSC ............................................................... 30 5.2.4 Absolute + relative (direct+indirect) tax + SSC burden ........................... 30 5.2.5 Household composition, children and OAPs ............................................ 33 5.2.6 Privileged income, opt out option for the wealthy .................................... 35 5.2.7 Rebates for some, higher payments for others .......................................... 35 3 5.3 Special case professionally insured ................................................................ 35 5.3.1 Civil Servants ............................................................................................ 35 5.3.2 Other professionally insured ..................................................................... 36 5.4 Privileging private and corporate wealth ........................................................ 36 5.4.1 Lower rates for corporate and private wealth ........................................... 36 5.4.1.1 Special situation of reunification ....................................................... 37 5.4.2 Excuse “Tax Competition”, Subsidies ...................................................... 37 5.4.3 Double Taxation vs. Double Non-Taxation .............................................. 38 5.4.4 Result: Comparatively little revenue from “Wealth Taxes” ..................... 39 5.4.5 The problem of employer solidarity ......................................................... 40 5.5 Low-pay and atypical employment, tax & SSC revenue ................................ 40 5.5.1 Definitions ................................................................................................ 40 5.5.2 Context and dimension ............................................................................. 41 5.5.2.1 “Self-employment” ............................................................................ 41 5.5.2.2 Low pay segment ............................................................................... 42 5.5.2.3 Conclusion ......................................................................................... 42 5.5.3 Consequences for tax revenue .................................................................. 43 5.5.4 Consequences for SSC revenues ............................................................... 43 5.5.5 Consequences for tax payments ................................................................ 43 5.5.5.1 Kombilohn & Aufstocker .................................................................. 43 5.5.5.2 Tax financed subvention of social insurance ..................................... 43 5.5.5.3 Tax funded Social welfare ................................................................. 43 5.5.6 Low pay segment, Minimum wage, black labour ..................................... 44 5.6 Conclusion ...................................................................................................... 44 6 Trends in the taxation of environment, capital, labour .......................................... 46 6.1 Decreasing share of “green taxes” .................................................................. 46 6.2 Unfair distribution of burden and profit ......................................................... 47 6.3 Global dimension ............................................................................................ 49 7 Justice Considerations ............................................................................................ 49 7.1 Shifts in revenue, rising costs and debt, cutting assistance ............................ 49 7.2 Falling out at the bottom, opting out at the top .............................................. 50 7.3 Shift from taxing wealth to indirect taxation .................................................. 50 7.4 SSCs, not taxes, are the problem .................................................................... 51 7.5 Balancing Social Insurance deficit with new and indirect taxes .................... 52 7.5.1 Pensions .................................................................................................... 52 7.5.2 Insurance against sickness ........................................................................ 53 7.5.3 Insurance against unemployment .............................................................. 53 7.5.4 Conclusion ................................................................................................ 54 4 7.6 Different transparency for low and high income ............................................ 54 7.7 Demography and generational justice ............................................................ 54 7.8 From “Ability to pay” to “Inescapability” ...................................................... 55 8 Research focus ....................................................................................................... 56 8.1 Social Security questions & Reform .............................................................. 56 8.1.1 Bedingungsloses Grundeinkommen/Basic Income Grant ........................ 56 8.1.1.1 Namibia .............................................................................................. 57 8.1.2 Reward and unburden labour .................................................................... 57 8.1.3 Reform the foundation of the SSC system ................................................ 57 8.1.3.1 Die Bürgerversicherung ..................................................................... 58 8.1.3.2 Contributions from business transactions .......................................... 58 9 Bibliography .......................................................................................................... 58 Register of graphics Graphic 1 Aggregate tax collections by major tax type in 2010 (tax/GDP %) ........................ 10 Graphic 2 Top Income Tax Rates in selected OECD countries ............................................... 11 Graphic 3: Tax and