From 1999 to 2005 the former Red-Green government in Germany enacted a series of ambitious tax cuts that were supposed to boost the German Economy. The article argues that these tax cuts instead of boosting the economy involved major costs. The revenue losses induced substantial expenditures...

I discuss the theoretical and empirical underpinnings of recent and announced tax policy of the German government. In contrast to a popular view, I argue that German tax policy should focus less on growth and unemployment. Today, the central tasks of tax policy should be to stabilize fiscal...