Abstract
In comparison with other countries the burdening of German companies by direct taxes is undoubtedly one of the highest in the world.1 From business circles and by politicians as well as on the part of economists it is increasingly pointed out that, due to the high marginal taxation of profits made by firms, Germany will become less attractive a location for investments. In order to meet the international competition of tax systems, it is therefore claimed to reduce the corporation tax rates (at present 36% on dividends, 50% on retained earnings) and the maximum marginal tax rate (at present 53%) of the income tax burdening the profits of personally held companies. Furthermore, there is an ongoing discussion whether the local business tax2 (Gewerbesteuer), to be paid by all companies, should be reduced or, if possible, even completely abolished.
This paper contains results from a broad research program on measuring welfare effects of alternative plans to reform the German tax system. The authors gratefully acknowledge support from the Deutsche Forschungsgemeinschaft. We also owe a special debt of gratitude to Antoinette Broek, who revised the text with respect to its translation.
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Duschek, KJ., Farken, T., Rose, M. (1994). Welfare Effects of Abolishing the German Business Taxes — An Applied General Equilibrium Analysis —. In: Eichhorn, W. (eds) Models and Measurement of Welfare and Inequality. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-79037-9_15
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