Tax subsidy

from Wikipedia, the free encyclopedia

Tax subsidies or tax breaks are exceptions to the extent of a tax or tax liability , the reason for which does not lie in the tax system. Tax breaks are used to pursue political goals. Your assessment must consider and weigh the effects on the objectives pursued and the side effects (distribution, efficiency, deadweight effects ) in comparison to alternative measures.

definition

Tax subsidy is a term that does not have particularly sharp contours in everyday language. The classification of certain tax regulations as tax subsidies is largely undisputed in the scientific discussion in many cases, but is discussed controversially in some cases.

According to Georg Jochum , tax subsidies (tax relief) are to be defined as follows:

  1. A tax subsidy is a state benefit
  2. The recipients are one or more taxpayers
  3. The granted advantage consists in sparing a tax burden that is actually to be borne. The exemption therefore represents an exception to a rule. The rule results from the same treatment of the same facts or objects in the sense of a comparative standard.

Heinrich Wilhelm Kruse defines the term as an exception regulation that deviates from the tax system and leads to reduced tax revenues for the public sector.

Subdivision

Tax subsidies can be divided according to whether they pursue a steering purpose or a redistributive purpose.

  1. A control purpose is pursued when the advantage is granted in order to induce a certain behavior or to reward it afterwards.
  2. A redistributive purpose is pursued when the benefit is granted to correct a certain state of wealth distribution.

reasons

The most important reasons that can speak in favor of tax breaks as an alternative to expenditure-side subsidies or transfers as well as regulatory solutions, the OECD cites in particular to reduce administrative costs, since fewer cash flows have to take place, and to reduce tax evasion and tax evasion.

objection

Nevertheless, the OECD notes that there are both theoretical and practical objections to tax breaks. In addition, there are political-economic considerations and the question of transparency.

Theoretical objections

The theoretical objections arise from the objectives of tax policy:

  • Justice: Tax breaks have distributional consequences because ultimately those groups - typically the richest - benefit most for whom the measures were not intended. This effect is reinforced by the progression of the tax scale ("upside-down subsidy").
  • Enforcement problem: The tax authority is often not in a position to clarify the entitlement of a deduction in every case because it lacks the resources and area-specific experience.
  • Simplicity: Tax systems are often complex in and of themselves. This complexity is increased disproportionately by tax breaks. The number of clauses, provisions, instructions and forms is growing, and the layman consequently lacks the necessary tax knowledge to apply all regulations correctly (lack of transparency). This can have a particularly adverse effect on tax morale.
  • Budget responsibility: The cost of tax breaks is less obvious and more difficult to estimate. Misjudgments can lead to unexpected, large loss of income.

Practical objections

Practical objections to the use of tax breaks include:

  • The number of tax breaks is increasing. Tax breaks are often prepared by different parliamentary committees than technical spending projects. Accordingly, there is often no comparison with other spending projects that serve the same purpose.
  • The tax breaks also grow in terms of amount. Historically, tax breaks have not been subjected to any systematic or critical review. As a result, they can grow uncontrollably over time. In contrast to expenses, which have to be justified again and again, their necessity is not evaluated regularly. It is also politically popular that tax breaks tend to be less visible.

Political and economic objections

One of the political and economic considerations that speak against tax breaks is the following: Tax breaks allow the fiscal ratio (as it is defined today) to be reduced. Under today's definitions, the budget does not measure tax breaks or regulation. The size of the budget is therefore only of limited relevance to the actual state activity in the economy. Therefore, the OECD recommends that tax breaks, such as direct grants , be budgeted like any other expense. Otherwise there will be incentives to increasingly grant financial aid through tax breaks and thus undermine the functions of the budget.

In individual states

Germany

In Germany the law does not provide a definition of a tax subsidy. The implicit reference system is in fact re-evaluated after every change in the law. The loss of revenue for the federal government amounts to € 15.8 billion, which is 0.54% of GDP. For the federal and state governments as a whole, they amount to € 26.7 billion. If one looks at alternative estimates such as B. the Institute for the World Economy in Kiel, this results in estimated revenue shortfalls for the state totaling almost € 49 billion, which corresponds to a share of GDP of 1.7%. Germany has officially launched a systematic review of tax subsidies, drawing on the views of various reputable economic institutes. This approach is intended to increase the credibility of analysis and estimates.

In Germany there are various lists that designate certain tax regulations as tax subsidies, such as the subsidy report of the federal government or the Koch-Steinbrück list.

Koch-Steinbrück list

The Koch Steinbrück List was drawn up in 2003 under the leadership of the former Prime Ministers Roland Koch and Peer Steinbrück . In it, among other things, the tax regulations mentioned in the following subsections (not a complete list) are referred to as tax subsidies. Tax regulations are also referred to as subsidies that are not listed as subsidies in the Federal Government's subsidy report.

The restriction on the deduction of expenses for journeys from the home to the place of work (the flat-rate distance allowance such as business expenses are only applied from the 21st kilometer) has been declared unconstitutional in the judgment of the Federal Constitutional Court of December 9, 2008 , as the regulation is an unjustified deviation from the represents an objective net principle and is consequently incompatible with Article 3 (1) of the Basic Law ( principle of equality ). Koch and Steinbrück are still of the opinion that the flat-rate distance allowance is a subsidy.

Income tax
  • Home Ownership
  • Distance lump sum (not included in the federal government's subsidy report)
  • Tax exemption from employer subsidies for journeys between home and work
  • Employee lump sum (not included in the federal government's subsidy report)
  • Savers allowance
  • the special expenses allowance for life insurance
  • Exemption limit of € 50 per month for employees with certain benefits in kind
  • Surcharge for Sunday, public holiday and night work
  • Tax reduction for expenses for household-related employment (no reduction planned for economic reasons)
  • Allowance for employee discounts
  • Exemption for non-cash rewards from customer loyalty programs
  • half the tax rate for business capital gains (not included in the federal government's subsidy report)
  • General tax exemption for capital gains for entrepreneurs
  • Tax reduction and special expenses deduction for party donations
  • Exemption for severance payments
  • Deductibility of business entertainment expenses and gifts (not included in the federal government's subsidy report)
  • Exemption for capital gains on income from agriculture and forestry
  • Allowance farmers and foresters
  • Determination of profit from agriculture and forestry according to average rates
  • Reduction in tax rates for extraordinary income from forestry
  • Exemption for the sale of shares in corporations
  • Exemption for capital gains for freelancers

Deduction for wear and tear in income tax:

  • Degressive deduction for wear and tear for rented residential buildings (not included in the federal government's subsidy report)
  • Increased deduction for wear and tear on buildings in redevelopment areas
  • Degressive deduction for wear and tear for movable assets (not included in the federal government's subsidy report)
  • Half-yearly deduction for wear and tear for movable assets (not included in the federal government's subsidy report)
  • Immediate business expense deduction for low-value assets (not included in the federal government's subsidy report)

Retirement income tax in income tax: (is classified as a tax subsidy, but no reduction is planned for the time being)

Inheritance tax
  • Approach of low income values ​​for agricultural and forestry assets for the purposes of inheritance tax
  • Exemption for inheritance / donation of business assets
  • Tariff limitation for the acquisition of business assets
value added tax
  • Sales tax exemption for contract research by universities
  • Exemption from medical services (no reduction planned yet)
  • Exemption for social security agencies, medical services, old people's homes, etc. (no dismantling planned yet)
  • Tax exemption for the procurement of insurance cover (no reduction planned yet)
  • Tax exemption for building society and insurance agents (no reduction planned for economic policy reasons)
Others

Controversies using the example of the flat-rate distance allowance

Partly in the scientific literature, it is considered that the traveling allowance is a tax subsidy, sometimes the decision is made contradicted.

The tax norm that sets the flat-rate distance allowance ( Section 9 Paragraph 1 Clause 3 Number 4 EStG) basically acts as a disadvantage for commuters. This results from the fact that the travel expenses do not represent expenses for the lifestyle according to § 12 EStG. Without an express regulation of the distance flat rate , the travel costs to work would be tax-deductible as income- related expenses in accordance with the general clause in Section 9 (1) sentence 1 EStG . Then, however, in the amount of the actually incurred costs (in accordance with the legal situation until the introduction of the distance flat rate in 1955), while the distance flat rate flat-rate the travel costs at an unrealistically low amount. This goes so far that since the reduction in the distance flat rate to € 0.15 per km driven (in 2004), the income tax-lowering effect of the distance flat rate no longer even compensates for the tax burden caused by commuting with mineral oil tax and VAT on mineral oil . As a rule, the commuter flat-rate is often not a discount, but a disadvantage.

With the introduction of the travel lump sum, which is not dependent on the means of transport, in 2001, there is always a subsidy effect if a commuter actually has no or only very low travel costs (e.g. because he rides in a group for free).

Paul Kirchhof , on the other hand, objects that the choice of place of residence is a private decision and the travel expenses to work are therefore purely private, so that a tax deduction is not justified. In the opinion of the DIW, however, it cannot be made quite that simple . The labor and housing markets are not entirely flexible, and most workers are forced to accept travel time and travel costs. Commuter costs are (also in the opinion of the Federal Constitutional Court) typical “mixed-cause” expenses, in which, in addition to professional reasons, preferences of private life also play a role. In the view of the DIW, this speaks in favor of differentiating the deduction for commuting expenses more on the basis of the proportion of the professional cause.

Switzerland

A study by the Federal Tax Administration (FTA) in February 2011 showed that the estimated loss of revenue as a result of tax breaks for federal taxes, depending on whether an income or consumption-oriented tax standard was used, was CHF 21 billion per year (3.9% of GDP ) and CHF 17 billion (3.2%). For direct federal tax, the shortfalls amounted to CHF 4.5 or 8.5 billion (in relation to total income of 17.9 billion), depending on the tax standard, and for VAT 8.1 billion CHF (in relation to total income of 20.3 billion).

In total, the FTA identified 99 tax breaks at federal level, including 40 for direct federal tax, 27 for value added tax and 24 for stamp duties . According to this, the most important tax breaks include (specifying the annual loss of income for the federal government in CHF million assuming an income-oriented tax standard):

Direct federal tax for natural persons
  • Deduction of employee and employer contributions to the 2nd pillar (for employees): € 3,500 million
  • Deduction for contributions to pillar 3a : 830 million
  • Child deduction: 710 million
  • Tax exemption for capital gains from private assets: 670 million
  • Tax exemption for inheritances and gifts (1/5 of the rate): 600 million
  • Deduction of travel costs from the professional costs of employed persons: 600 million
  • Deduction for external catering from the professional costs of employed persons: 400 million
  • Flat-rate deduction for maintenance costs of private property: 380 million
  • Undervaluation of the imputed rental value : € 235 million
  • Deduction of donations for charitable purposes: 180 million
  • Expense taxation : no estimate
Direct federal tax for legal entities (no estimates)
  • Tax exemption for local authorities and their institutions
  • Tax exemption for licensed transport companies
  • Tax exemption for legal persons who pursue public or charitable purposes
  • Reduced tax rate for associations, foundations and other legal entities
value added tax
  • Tax exemption for health and social services: € 1,930 million
  • Tax exemption for travel agency services: € 60 million
  • Tax exemption for companies with an annual turnover of less than 100,000 CHF: 40 million

See also

swell

References and comments

  1. Report FTA 2011, p. 1.
  2. Report FTA 2011, p. 4.
  3. ^ Georg Jochum: The tax break. Lit Verlag, Berlin 2006, ISBN 3-8258-7738-8 , p. 54.
  4. ^ Georg Jochum: The tax break. Lit Verlag, Berlin 2006, ISBN 3-8258-7738-8 , p. 73.
  5. ^ Tipke, Lang: Tax Law . 2002, §19 margin no. 74.
  6. ^ Georg Jochum: The tax break. Lit Verlag, Berlin 2006, ISBN 3-8258-7738-8 , p. 84.
  7. a b Report ESTV 2011, p. 5, with reference to: OECD, The Choice Between Base Broadening And Tax Incentives: Tax Expenditures In OECD Countries, 2008, Note by Joseph J. Minarik, pp. 5–10.
  8. a b c Report FTA 2011, p. 5.
  9. Report 2011 FTA, p. 8.
  10. Twenty-second subsidy report (PDF) on bundesfinanzministerium.de
  11. Hessian State Chancellery: Subsidies Reduction ( Memento of the original from July 15, 2011 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. @1@ 2Template: Webachiv / IABot / www.hessen.de
  12. BVerfG, 2 BvL 1/07 of December 9, 2008, Paragraph No. 68
  13. ^ Claus Hulverscheidt: Duo Infernale . In: Sueddeutsche Zeitung
  14. z. B. Lothar Wildmann: Economic Policy . Volume 3 of Modules in Economics . Oldenbourg Wissenschaftsverlag, 2007, ISBN 3-486-58197-X , p. 184 f.
  15. Claudia Wesselbaum-Neugebauer: The flat rate for distance - subsidy or advertising costs? FR 2004, 385-393.
  16. Claudia Wesselbaum-Neugebauer: The flat rate for distance - subsidy or advertising costs? FR 2004, 386; see also BVerfG, 2 BvL 1/07 of December 9, 2008, paragraph no. 72, 73. “There is much to be said for the fact that the road costs in question here are not, according to § 12 No. 1 sentence 2 EStG, as“ expenses for the lifestyle that the economic or social position of the taxpayer entails, even if they are used to promote the Occupation or the activity of the taxpayer ”. Overcoming a distance between home and place of work is regularly a necessary condition of professional activity. Since living within walking distance of the "factory gate" is not possible for the vast majority of taxpayers for reasons of (building planning) law (principle of separating different types of land use in building planning law) and factual (lack of supply of appropriate living space), many taxpayers incur Travel costs as a necessary prerequisite for their employment. "
  17. Claudia Wesselbaum-Neugebauer: The flat rate for distance - subsidy or advertising costs? FR 2004, 387, 388.
  18. Claudia Wesselbaum-Neugebauer: The flat rate for distance - subsidy or advertising costs? FR 2004, 387, 389.
  19. Weekly Report of DIW Berlin 40/03
  20. Report FTA 2011, pp. 24–25.
  21. Report FTA 2011, p. 16 ff.