Dual income tax
As dual income tax a system is the income tax referred to in which two elements of income each different tax rates are subjected.
Demarcation
The principle still prevailing worldwide is that of synthetic income tax with uniform taxation of all income.
Country comparison
The concept of a dual income tax has been the basis of income taxation in Finland , Sweden and Norway in different forms since around the year 2000.
With the introduction of capital gains tax in 2009, it also applies to income tax in Germany.
principle
In the dual income tax is the income of the taxpayer in two parts, so-called schedular split, then the different control sets are subjected. Income from work is taxed using the direct progressive income tax rate. Investment income on the other hand with a lower constant rate ( unit control taxed).
The reasons for the different taxation of the two income components are usually based on the aspects of international competitiveness and tax efficiency. In contrast to earned income, capital income can very easily be shifted internationally. Hence, capital income tax rates would have to be low to attract investment. Conversely, the tax rates on earned income could be higher in order to generate the necessary tax revenue . A dual income tax is therefore fundamentally more efficient than a synthetic income tax in terms of the achievable revenue.
Non-taxation of fictitious profits through inflation
Furthermore, the dual income tax should serve to reduce the taxation of fictitious profits through inflation . The dual income tax thus takes account of the principle of taxation based on performance . Income from capital assets and from companies to a certain extent simply compensate for the loss in value of assets due to inflation. These parts do not increase the efficiency of the taxpayer, but still become part of the tax base. The lower tax rate compensates for this injustice.
Schedule delimitation
The division between earned income and capital income is made differently in the various concepts of dual income tax. For capital income business are usually gains , dividends , interest , income from rents and leases and capital gains counted. For earned income generally includes income from employment , pensions and public pensions .
The main difficulty of the dual income tax is the delimitation of the two schedules. Because of the lower tax rate on capital income, there is an incentive to shift profits into this area.
Tax reform proposal 2006 in Germany
For Germany, the Council of Economic Experts proposed the introduction of a dual income tax in the 2003 annual report. In April 2006, he specified his proposals in an expert report commissioned by the Federal Ministry of Finance .
According to this, the split into capital and earned income should not be based on the previous types of income, but only an imputed return on equity should be taxed at a reduced rate. In addition, in the case of interest and dividend income as well as capital gains, the portion that corresponds to this interest rate should be capital income. Under the current circumstances, the Advisory Council considers an interest rate of 6% of the capital employed to be appropriate. The remainder is initially subject to (re) taxation as earned income under the Income Tax Act. Alternatively, however, the assessment can be carried out with the normal tariff for earned income.
Types of income for dual income tax according to the reform proposal:
- Income from agriculture and forestry
- Business income
- Income from self-employment
- Income from real assets
- Income from capital gains
These are to be divided into
| Employment share = earned income | Interest component = investment income |
|---|---|
| plus. Income from employment | plus. Income from capital
(Distributions at shareholder level reduced by the interest exemption) |
| plus. Income from recurring earnings (pensions) | plus. Rental and leasing income |
| plus. Income from retirement plans | |
| = | = |
| Taxation with the progressive income tax rate - maximum tax rate 42% | Taxation with a proportional tax rate of 25% (including solidarity surcharge) |
Web links
- The wavering state: zeit.de from May 25, 2005 (explanation of the principle of dual income tax in Scandinavia)
Individual evidence
- ↑ Expertise of the Expert Council ( Memento of the original from June 19, 2006 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
