It is often feared that tax competition might lead to a “race to the bottom”. The consequence of a decline of tax rates on capital income would be shrinking capital income tax revenues and difficulties for national governments to perform their usual tasks. The paper analyzes what happened to...

Facing the general election in 2013, the level of the income tax is a major issue of the economic policy debate in Germany. The paper presents data on the income tax burden in the period 1958–2012. The data refer to specific levels of real income as well as to specific levels of income in...

It is argued that the German system of supporting low wage income earners by government transfers gives incentives for employers and employees to contract low wages and then to exploit the government. The paper analyses if such incentives do exist. It turns out that this is the case under...

Based on a description of the German system of taxes and transfers, the incentives to work are analyzed for several groups of the labor force. The effects of the “Hartz IV” reform (effective from 2005 onwards) on the incentives receive particular attention. It turns out that the marginal...