Performance principle

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The performance principle is a fundamental principle of taxation and as such a result of the general principle of equality ( Article 3 of the Basic Law ) in tax law . It generally states that everyone should contribute to the financing of state services in accordance with their individual economic capabilities .

Basics and tax systematic classification

As tax justice (. As standard work such is the prevailing opinion of the German tax law Tipke / Kruse ) meant a tax equal distribution of loads. This is to be achieved by aligning taxation with the principle of economic efficiency.

The performance principle has thus replaced the older equivalence principle , which is now only used to justify the collection of certain taxes (e.g. trade tax ). In the equivalence principle, the tax is viewed as the price for state services, so that everyone has to pay as much tax as the benefits accruing to them from state activity (benefit principle) or the cost of the state services they claim (cost principle).

In accordance with the ability to pay principle, the amount of the tax is not based on equivalence considerations, but solely on the question of how much the individual taxpayer is able to contribute to the state financing (ability as ability to pay taxes).

The specification of the performance principle

The problem is that neither the legal concept of fair taxation nor that of performance is precisely defined or codified as a legal definition in the tax laws . If you want to achieve tax equity through the performance principle, you have to specify the term.

Horizontal and vertical tax justice

A distinction is made between horizontal (between recipients of the same income) and vertical (between recipients of different income levels) tax equity. The efficiency principle is primarily concerned with horizontal justice. When comparing recipients of different incomes, the performance principle initially only states that it must be ensured that the person with the higher income also has to pay more taxes. However, it says nothing about how much more. Vertical fairness in taxation is difficult to define - it finds its expression, for example, as one of the reasons for the progressive tariff of the Income Tax Act . According to Klaus Tipke , the efficiency principle does not necessarily call for a progressive tariff, he mainly sees the welfare state principle as the justification for the progressive income tax rate . The Federal Constitutional Court derives the requirement of a progressive rate of pay from the principle of equality.

Subjects of tax capacity

The first question that needs to be answered is who or what can have tax capacity.

In principle, the principle of equality applies primarily to natural persons , but also to domestic legal persons (above all corporations ) via Art. 19 (3) GG . The principle of equality also applies to foreign legal persons via European law prohibiting discrimination . Since companies, as reference objects of the performance principle, are ultimately always used by people to generate income, the interaction between taxation at company level and the people behind it must also be taken into account.

Measurement of performance

Observance of the efficiency principle in the German tax system is therefore faced with the question of what the appropriate indicator for tax efficiency is. Basically, three sizes are conceivable for this: Income , wealth or consumption , whereby every tax levy has a burdensome effect on all three sizes (if income is taxed, it decreases so that less wealth is built up and / or less can be consumed). While Tipke only wants income to be an indicator of tax efficiency, Rose advocates a consumption-based tax system.

In principle, income is a suitable indicator of productivity. It remains to be seen, however, whether the total income or the consumption income (minus investment / saving) should be the tax base , what counts as income and over which period of time the income should be measured. For natural persons, a distinction is usually made between the objective net principle and the subjective net principle. The objective net principle requires that only the earned income, i.e. the earned income reduced by the gainful expenses, be taxed (profit taxation instead of income taxation). The subjective net principle also requires the deductibility of private expenses that are indispensable for one's lifestyle ( basic allowance , certain special expenses and extraordinary burdens ).

With sales tax , the end consumer is the tax payer , even if the tax is paid by the entrepreneur . Sales tax and income tax complement each other, as sales tax covers consumption while income tax covers income. Nevertheless, precautions are taken to remove or exempt certain services from sales tax (basic food, medical services, etc.).

Violations of the performance principle

Violations of the performance principle are justified as unequal treatment. Control standards in particular are viewed as justified violations of the performance principle. In addition, may within narrow limits of practicality considerations generalizations lead to smaller differences in treatment.

History and international comparison

Tax justice through equality has been a recognized goal of tax collection since Adam Smith ( equality of taxation ) at the latest . It can be found in a similar form in the constitutions of many countries and already in the French Declaration of Human and Civil Rights from 1789 . While it was still contained in the Weimar Constitution (Art. 134 WRV), the Basic Law only contains the general principle of equality ( Art. 3 GG).

Turning away from the performance principle

Although the efficiency principle is recognized almost worldwide as a basic principle of taxation, it is currently being replaced by dual taxation (for example by dual income tax ) in many countries . Income from mobile sources (especially capital ) is taxed lower than that from immobile sources (e.g. work ). This is mostly justified with the competitiveness of the respective own tax location (since one cannot keep the mobile sources of income in the country without the more favorable taxation). In Germany, dual taxation will take place from 2009 in the form of withholding tax on investment income.

However, the dual income tax can also be justified with the performance principle. Income from capital assets and from companies to a certain extent simply compensate for the loss in value of the assets due to inflation . These parts do not increase the taxpayer's efficiency, but still become part of the tax assessment base . The lower tax rate partially compensates for this injustice.

literature

Individual evidence

  1. ↑ cf. Klaus Tipke / Heinrich Wilhelm Kruse (eds.): AO & FGO comment , § 3 AO , point 50 mwN for h. M. and contrary opinion.
  2. ↑ cf. BVerfG, judgment of June 24, 1958, Az. 2 BvF 1/57, BVerfGE 8, 51 , Rn. 70.
  3. ↑ Adam Smith, Wealth of Nations , 703.