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Reform der Gemeindefinanzen

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  • Thiess Büttner

Abstract

The paper contributes to the discussion about the reform of local finances in Germany. This discussion is centered around the local business tax, which displays severe shortcomings. Somewhat surprisingly, local governments have so far rejected proposals for reform. The paper shows that this can be explained by the role of municipal fiscal equalization which tends to protect local governments from some of the major problems of local business taxation, i.e. revenue fluctuations and tax competition. A substitution of the business tax by a local income tax as recently proposed would require a substantial reform of the fiscal equalization system which implies many uncertainties and risks. As a reasonable alternative the paper suggests to improve the land tax.

Suggested Citation

  • Thiess Büttner, 2007. "Reform der Gemeindefinanzen," ifo Working Paper Series 45, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_45
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    References listed on IDEAS

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    5. Homburg, Stefan, 2000. "Reform der Gewerbesteuer," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 39, pages 42-55.
    6. Maiterth Ralf & Zwick Markus, 2006. "A Local Income and Corporation Tax as an Alternative to the German Local Business Tax: An Empirical Analysis for Selected Municipalities," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(3), pages 285-307, June.
    7. Wildasin, David E., 1987. "Theoretical analysis of local public economics," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 29, pages 1131-1178, Elsevier.
    8. Büttner Thiess & Schwager Robert, 2003. "Länderautonomie in der Einkommensteuer: Konsequenzen eines Zuschlagsmodells / Income Tax Autonomy of German States: Reform Options and Consequences," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(5), pages 532-555, October.
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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