§ 34a EStG - Einstieg in eine rechtsformneutrale Besteuerung oder Option für ein virtuelles Trennungsprinzip?
AbstractThe paper addresses the question whether the preferential treatment of retained earnings according to section 34a EStG is suitable to achieve a comparable tax burden of partnerships and corporations. To calculate the tax burden on retained earnings requires the combination of the progressive personal income tax, the trade tax, which varies widely depending on the community and partnerships payments for interest, rent, leasing, and royalties, as well as the preferential tax rate. The resulting tax has to match the business tax rate of corporations, in order to tax retentions irrespective of the legal form. It turns out that, due to the specifics of the German local tax, the reduced tax rate has to be calculated individually. It can be shown that it is impossible to determine a reference value for all domestic companies. By introducing a "virtual principle of separation" (virtuelles Trennungsprinzip) we allow entrepreneurs to separate between the level of the firm and the ow ner of the firm, when retained earnings are to be taxed. The retained profit is taxed at the corporate income tax rate of 15 %, the solidarity surcharge of 5.5 % and the trade tax rate; once the profit is distributed, it is taxed at the progressive personal income tax rate of the partner.
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Bibliographic InfoPaper provided by Universitätsbibliothek Wuppertal, University Library in its series Schumpeter Discussion Papers with number sdp08009.
Date of creation: Dec 2008
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business taxation; preferential treatment of retained earnings; principle of separation; trade tax;
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
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