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Zurück zum Trennsystem als Königsweg zu mehr Föderalismus in Zeiten des „Aufbau Ost“? / Back to a Divided Tax System as an „Ideal Way“ for Reinforcing German Federalism in Times of Adequate Financial Aid for East Germany

Author

Listed:
  • Lenk Thomas

    () (Universität Leipzig, Wirtschaftswissenschaftliche Fakultät, Institut für Finanzen – Finanzwissenschaft, Jahnallee 59, D-04109 Leipzig)

  • Schneider Friedrich

    () (Ordentlicher, Vizerektor für Außen- und Auslandsbeziehungen, Johannes Kepler Universität Linz, Altenberger Straße 69, A-4040 Linz-Auhof)

Abstract

One fundamental problem of the German financial revenue system including the horizontal tax redistribution is that financial, planning, and administrative responsibilities for a single public item are often split among different legislative bodies. This had led to a drastic restriction of the Länder ( = German states) autonomy. A rigorous change from a joint tax system to a divided tax system with clear assignment of all three responsibilities for each spending item to one administrative level can alleviate this problem and eliminate the power imbalance between the different levels of governments (local, state, federal). After presenting some basic aspects of the German revenue equalisation system, proposals for a reform leading to a divided tax system are introduced. A new distribution of spending items and taxes for Germany is developed, which were able to win the necessary political majority in a simulated vote of the second chamber (Bundesrat). In detail it is suggested to assign the joint tasks largely to the states, to designate taxes directly for specific authorities and to repeal permanent federal supplemental payments. Nevertheless, to guarantee adequate financial aid for East Germany, transfers to East German states are set to a new basis.

Suggested Citation

  • Lenk Thomas & Schneider Friedrich, 1999. "Zurück zum Trennsystem als Königsweg zu mehr Föderalismus in Zeiten des „Aufbau Ost“? / Back to a Divided Tax System as an „Ideal Way“ for Reinforcing German Federalism in Times of Adequate Financial ," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(3-4), pages 409-437, June.
  • Handle: RePEc:jns:jbstat:v:219:y:1999:i:3-4:p:409-437
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    References listed on IDEAS

    as
    1. Homburg, Stefan, 1994. "Anreizwirkungen des deutschen Finanzausgleichs," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 312-330..
    2. Boss, Alfred & Bothe, Adrian, 1987. "Ausgabenkürzungen im öffentlichen Sektor," Open Access Publications from Kiel Institute for the World Economy 388, Kiel Institute for the World Economy (IfW).
    3. Homburg, Stefan, 1997. "Ursachen und Wirkungen eines zwischenstaatlichen Finanzausgleichs," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 61-95.
    4. Eichenberger, Reiner, 1994. "The Benefits of Federalism and the Risk of Overcentralization," Kyklos, Wiley Blackwell, vol. 47(3), pages 403-420.
    5. Borge, Lars-Erik & Rattso, Jorn, 1997. "Local Government Grants and Income Tax Revenue: Redistributive Politics in Norway 1900-1990," Public Choice, Springer, vol. 92(1-2), pages 181-197, July.
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