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Commentary on the pension taxation ruling of the Federal Constitutional Court

Author

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  • Andrea Gebauer

Abstract

On 6 March 2002 the Federal Constitutional Court announced its long-awaited ruling on the taxation differences between employee pensions and pensions of public officials. Already in 1980 the Court had declared the existing system to be constitutional but in need of correction in terms of the preferential treatment of employee pensions. In 1992 it again pointed out the need for reform. The present ruling underlines the necessity of new and far-reaching pension reform, but is quite harmless in comparison with previous decisions of the Federal Constitutional Court on family taxation. While the predominant portion of recipients of employee pensions do not have to pay any taxes today, this could change in future, at least for those with high pensions or considerable supplementary income (for example, from renting property). In contrast, the average pensioner need not fear an additional tax burden because of the high level of deductions which will presumably remain intact.

Suggested Citation

  • Andrea Gebauer, 2002. "Commentary on the pension taxation ruling of the Federal Constitutional Court," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(10), pages 29-34, May.
    • Handle: RePEc:ces:ifosdt:v:55:y:2002:i:10:p:29-34
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    File URL: https://www.ifo.de/DocDL/ifosd_2002_10_4.pdf
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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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