The German property tax is probably unconstitutional. Since this tax violates the ability-to-pay principle anyway, the author proposes a simpler design that preserves municipal and state revenues and also avoids increases in housing costs.

The article concerns issues of fiscal federalism in the broadest sense. It analyzes both the political causes and the economic consequences of interregional and international grants. Examples from Germany and from the European Union are considered.

The paper analyzes the possible efficiency base of intergovernmental grants between rich and poor regions in a federal state.

The article analyses the incentive effects of the German system of intergovernmental grants.

Der Artikel befürwortet eine Reform des deutschen Finanzausgleichs.

The German property tax is probably unconstitutional. Since this tax violates the ability-to-pay principle anyway, the author proposes a simpler design that preserves municipal and state revenues and also avoids increases in housing costs.