Income Tax Code
The Income Tax Code, EStGB (colloquially Kirchhof-Modell ) is a proposal for the reform of the German income tax law developed by the research group Federal Tax Code under the direction of Paul Kirchhof . It was presented to the Finance Committee of the German Bundestag and the specialist press in 2001. It is not to be confused with the Income Tax Act .
The concept
A type of income
The concept provides that a distinction is no longer made between 7 types of income as before , but that all sources of income are treated equally regardless of their origin, regardless of whether they are salaries , interest , rental income or corporate profits. This means that there are no differences in the deduction options for different tax objects (horizontal and vertical offsetting).
Other tax subjects, equality of legal forms
The concept expands the circle of tax subjects . In addition to natural persons, “tax lawyers” are also subject to tax. The EStGB thus defines its own terms independently of civil law and covers all partnerships and special assets as well as corporations and completely replaces corporation tax . This eliminates design options and differences between the legal forms of companies.
Uniform tax rate and progression
The concept was as calculating as a constant marginal tax rate before 25%, a flat tax ( flat tax ) , which for low income indirectly progressive is.
Natural persons can deduct a simplification lump sum of up to 2000 euros from their income. A basic allowance of 8,000 euros and a social compensation amount of a maximum of 3,000 euros are deducted from their income .
The tax rate resulting later is a step limit rate rate . The first 5000 euros taxable income is assessed at 60% with 25%, the next 5000 euros at 80%. This results in de facto tax brackets with marginal tax rates of 15%, 20% and 25%. The kirchhof tax system thus reaches its top tax rate of 25% with an income of a maximum of 23,000 euros if you add the aforementioned tax exemptions. In addition, there is only an indirect progression , which is not achieved through the tariff structure, but through the exemptions in the assessment base.
The income splitting is not necessary. However, spouses can pool their basic allowances, as can the social equalization amounts.
Congruence of balance sheets
Balance sheet requiring companies to its trade balance as tax balance shall be used.
Counter-financing
In order to provide counter-financing, all tax breaks and exemptions are to be abolished and the tax base is to be greatly expanded, both for private individuals and for companies. However, the proposals for counter-financing miss the reality of tax law, as many of the savings models named by Kirchhof have long been banned by the legislature.
Furthermore, the net principle is to be abolished, i.e. the right of taxpayers to deduct the expenses (business expenses ) required to generate income from income. Instead, there should be a so-called single flat rate.
Political reception
The CDU and CSU were positive about the churchyard model and accepted Paul Kirchhof into the competence team of CDU candidate Angela Merkel , where his model became one of the central points of contention in the 2005 federal election campaign , although implementation in the next legislative period was not up for debate stood and both CDU / CSU and FDP led a different tax model in their election campaign programs.
The income tax concept with three marginal tax rates, which was presented by Friedrich Merz in 2003 , was based in part on the preparatory work of the Federal Tax Code Research Group .
SPD , Bündnis 90 / Die Grünen and PDS were opposed to the churchyard model and often pointed out that the uniform tax propagated by Kirchhof had already been implemented in some Eastern European countries. Characteristic of these countries is a huge social polarization, since the flat tax is to make especially foreign direct investment more attractive, while the poorer people often have to bear additional burdens. In addition, the reform of income tax in all Eastern European countries had required an increase in VAT, which was particularly a burden for families and low-income earners.
The alternative for Germany wants to use the churchyard model as a basis for simplifying German tax law.
Scientific evaluation
In an analysis presented in 2004, the German Institute for Economic Research considered the Kirchhof model, calculated on the basis of the propagated tax rate of 25%, as a tax relief that could not be financed in the short term. Almost everyone would benefit from the relief that cannot be financed in the short term (based on a flat tax rate of 25%), and the rich would benefit most.
The financial scientist Professor Stefan Homburg explains that the propagated tax rate of 25% in Kirchhof's book is only mentioned as an example. If you want to change the tax system in a revenue-neutral way, you have to calculate which tax rate multiplied by the new tax base leads to the same tax revenue as before. According to Homburg's estimate, the churchyard model would require a standard tax rate of around 35%.
literature
- Paul Kirchhof: The gentle loss of freedom: for a new tax law - clear, understandable, fair. Hanser Verlag 2004, ISBN 3446226893
- Paul Kirchhof: Income Tax Code: A Proposal to Reform the Income Tax and Corporate Income Tax. Hüthig-Jehle-Rehm publishing group 2003, ISBN 978-3811451360 .
- Paul Kirchhof: Germany caught up in debt. CH Beck 2012, ISBN 9783406640438
- DIW: Comparison of different tax reform concepts DIW weekly report 16/2004
- DIW: Fundamental reform of income taxation: To what extent can the assessment base be broadened and tax law simplified? (PDF; 142 kB) DIW weekly report 36/2005
- Scientific Advisory Board at the Federal Ministry of Finance: Flat Tax or Duale Income Tax - Two drafts for the reform of German income taxation in 2004
- Stefan Anton, Mathias Brehe, Hans-Georg Petersen: The concept of single tax in an empirical test (PDF; 472 kB) University of Potsdam 2002
- Christian C Reif: Reform of the taxation of income: necessity, requirements and possibilities. DUV Verlag 2005, ISBN 3835000764
Web links
- Interview with tax expert Stefan Homburg on the implementation and problems of the churchyard model
- Kirchhof's tax reform concept: Legalize it! (Manager Magazine, August 17, 2005)
- Michael Krons IN DIALOGUE with Prof. Paul Kirchhof (PHOENIX, July 9, 2011) ( MP4 ; 85.3 MB)
Individual evidence
- ↑ Der Spiegel , Christian Reiermann, Volkssport der Past [1]
- ↑ Die Zeit: Eastern Europe: Some countries have a flat tax. But it is controversial
- ↑ Günther Lachmann: The concrete goals of the alternative for Germany. In the world. April 6, 2013, https://www.welt.de/politik/deutschland/article115038859/Die-konkreten-Ziele-der-Alternative-fuer-Deutschland.html , accessed on April 7, 2013.
- ↑ Comparison of different tax reform concepts (DIW weekly report 16/2004) (PDF)
- ↑ Frankfurter Allgemeine Zeitung: Kirchhof-Modell: The rich benefit most (accessed on May 19, 2010)
- ↑ Deutschlandfunk : Mr. Kirchhof himself does not know the list either (accessed on May 18, 2010)