Take-away effect

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A deadweight effect (colloquially also deadweight mentality ) exists when laws contain certain financial incentives ( tax breaks , subsidies , subsidies ) and provide for a specific group of beneficiaries, but also others can take advantage of this benefit, although they can also take advantage of this legal advantage Measure would have shown certain behavior.

General

Deadweight effects are mostly the result of the abstract legal and administrative language, which means that a larger group of beneficiaries ( norm addressees ) can enjoy state benefits than what the legislature originally intended. If someone shows behavior that the legislature intended to create an incentive, it may happen that he would have shown this behavior even without the incentive. More targeted funding could prevent undesirable deadweight effects. If, therefore, the beneficiary groups are specifically named in laws, for example in the context of a final list , there is, however, the risk that groups not named have no entitlement even though they would be economically justified.

In 1983, Fritz W. Scharpf analyzed the mechanism of deadweight effects on the basis of an evaluated incentive program (a subsidy in the field of professional training), but without explicitly using the word “deadweight”. According to this, every incentive program has a control component that defines the required behavior and a motivational component that specifies the (financial) incentives.

Legal issues

The legislature is subject to the constitutional requirement to exclude unjustified deadweight effects by having to standardize the reasons for the burden "as unavoidable as possible" in the case of tax offenses. The legislature, however, accepts deadweight effects because it does not see the purpose of the law as being jeopardized as long as deadweight effects remain a marginal phenomenon. “Nobody would forego using their heating, although they know that heat losses occur depending on the degree of insulation.” Hereby the author describes the situation with which the legislator is confronted with financial laws. He is aware that there could be deadweight effects, but he still decides in favor of the proposed law because he is assuming that claims are predominantly justified.

In order to counter the risk of deadweight effects, the legislature sometimes tries to set up hurdles in special regulations in which the incentives are created. In the case of so-called “ savings depreciation ” ( Section 7g EStG), for example, he deliberately narrowed down the subsidy for future investments and set a profit surcharge of 6% of the depreciation. While the distance lump sum as a distance-dependent subsidy does not generally require individual proof, flight costs are to be assessed at the actual costs ( Section 9 (1) sentence 3 no. 4 sentence 3 EStG). This regulation serves to prevent significant deadweight effects, as the flight costs are lower than the flat-rate distance allowance would be. The legislature defined the concept of a business start-up restrictively from the outset in order to avoid undesirable structures and deadweight effects - despite the associated complication of tax law. The fact that the entitlement to care allowance is lower than the entitlement to benefits in kind has its objective reason in the deadweight effect feared by the legislature.

Take away effects in everyday life

The creation of jobs with state subsidies can lead to deadweight effects if the jobs were created without subsidies. For example, companies have a deadweight effect when they claim a wage subsidy for hiring an unemployed person who they would have hired anyway. Subsidies or subsidies are claimed even though a company would have chosen a subsidized company location without these benefits. There is a deadweight effect for employees if an unemployed person takes part in an active labor market policy measure , but would have found a new job even without it. Discount campaigns lead to a take-away effect because some of the buyers would have purchased the discounted goods even without a discount, so that this group of customers receives a " windfall profit ". Take-away effects can be limited here by only being able to purchase quantities that are customary in households . In the case of the scrapping premium , the deadweight effect was reduced by the fact that the premium was only paid when the scrapping of an old car was combined with the purchase of a new one.

The Scientific Advisory Board at the Federal Ministry of Economics and Labor assumed in a letter dated October 25, 2002 to the Federal Minister responsible, Wolfgang Clement , that companies that want to hire new employees anyway prefer to do so via a public personnel service agency , as here the Wage is subsidized. The additional employment effect hoped for through the creation of the agencies is therefore less than the number of unemployed people placed by the agencies suggests.

The deadweight effects associated with combined wages are said to be so significant that they should not be financed by the state. For example, subsidizing social security contributions up to a gross income of EUR 1,300 would only motivate around 100,000 additional employees to take up employment, but the costs incurred for this, including the loss of state income, would amount to EUR 4.1 billion per year. Allocated to the individual additionally employed employee, this results in an amount of almost 40,000 euros per year. The home owner's allowance was also abolished because of the overwhelming - here difficult to determine - deadweight effects. It was precisely here that there was a lack of normative orientation parameters for determining the deadweight effect, which could have been present in the event of a positive deviation from the conditions of a rented apartment.

As the legislature in 2006, the deductibility of artisans bills and household workers (such as cleaners ) allowed was in the introduction of § 35a , the main objective, para. 3 ITA actually reducing undeclared work . With this “craftsman bonus” there are deadweight effects in 70% of the craftsmen's services examined by the Federal Audit Office and in 30% of household-related services, so that the Audit Office advocates abolishing this benefit.

International

In Anglo-Saxon usage, there is no word for the take-away effect in this sense. The “free-rider effect” affects free riders , while “dead-weight-loss” is used in labor market measures such as wage subsidies and thus comes close to the deadweight effect. The French “effet d'aubaine” is more of an “unexpected advantage” or “stroke of luck”, which in turn corresponds to the windfall profit .

In its special report 1/2008, the European Court of Auditors defines deadweight as an effect "that would have occurred even without public intervention". According to this, the question of co-financing to prevent deadweight effects hardly played a role in the financing decision. The deadweight is a “risk that exists with state aid in general, as many large projects can have a positive net present financial value and a financial return above the discount rate; The aim of the aid is sometimes to lure an investment into a less developed area that would otherwise be made in another area. ”According to the Court of Auditors, deadweight is often seen as a relevant factor in important areas, e.g. B. grants for business investment, direct employment subsidies and vocational training measures that facilitate access to employment.

The tax exemption (“train or pay”), as in France and the Canadian province of Québec, can be accompanied by high deadweight effects, because a large part of the further training investment benefits workers who already take part in further training more than average.

consequences

Legal action cannot be taken against the deadweight effects, as the beneficiaries meet the incentive conditions materially and formally. The problem of the deadweight effect is one of the central topics of research into financial effectiveness, because the deadweight effect is a loss of effectiveness. The effectiveness research aims to ensure that laws with financial incentives should define the beneficiary groups as precisely as possible so that the funding can achieve a high level of efficiency and a steering effect occurs. Financial incentives are intended to induce a certain change in behavior in the addressee. However, since beneficiaries also make use of the financial donation who would have shown the same behavior even without the prospect of donation, the group of beneficiaries is larger, which leads to additional government expenditure or reduced income. As a result, the legal incentive loses its effectiveness because the intended additional effect does not occur in whole or in part. Government incentives are efficient if the beneficiary transactions would not have been carried out without the incentive.

On a the balance contained market subsidies lead to an increase in volumes, with the deadweight both the supply and in the demand is observed. Who gets the greater part of the deadweight effect depends on the price elasticity of supply and demand. The lower the price elasticity, the higher the deadweight. On the other hand, the more inelastic the demand, the fewer people can be induced to invest, purchase or participate in a program with a given subsidy. The relative share of drivers increases the more inelastic demand and supply react to price changes.

Deadweight effects lead to increased government spending or reduced income compared to a situation without “deadweight”. The beneficiaries take advantage of the state subsidy even though they would not have needed it from an economic point of view. A deadweight effect between 0% and 25% of all beneficiaries is considered to be low, while deadweight is <50%, high at> 50%. There is a high deadweight effect in favor of private projects, a decreasing deadweight effect in meritorious goods . The deadweight effect is even lower when purchasing public goods by private providers; it is lowest when purchasing public goods by public providers.

See also

literature

  • Take-away effect. In: Gabler's Economic Lexicon. Volume 2: L-Z. 12th, completely revised and expanded edition. Gabler, Wiesbaden 1988, ISBN 3-409-30948-9 .

Individual evidence

  1. ↑ Horst Zimmermann: The take-away effect. In: Scientific Studies. 7/1987, p. 339.
  2. ^ Fritz W. Scharpf: Interests of the addressees and scope for implementation in incentive programs. In: R. Mayntz (Ed.): Implementation of Political Programs, 2. Approaches to Theory Building. 1983, pp. 99-116.
  3. ↑ BVerfG, judgment of April 10, 1997, Az .: 2 BvL 77/92, BVerfGE 96, 1
  4. ↑ Jürgen Kühl: Social Policy in the Federal Republic. 1983, p. 214.
  5. ↑ BFH, judgment of December 12, 2001, Az .: XI R 13/00.
  6. ↑ BFH, judgment of March 26, 2009, Az .: VI R 42/07, BStBl II 2009, 724.
  7. ↑ German Bundestag, Bundestag printed paper 13/4839 of June 11, 1996, draft Annual Tax Act 1997. p. 77.
  8. ↑ BVerfG, judgment of April 3, 2001, Az .: 1 BvR 1629/94.
  9. ^ Georg Altmann: Active labor market policy. 2004, p. 42.
  10. ^ Letter from the Scientific Advisory Board at the Federal Ministry of Economics and Labor on the occasion of feared deadweight effects at personnel service agencies. ( Memento of October 27, 2004 in the Internet Archive ) Press release by the Federal Ministry of Economics and Technology, November 12, 2002.
  11. ↑ Hilmar Schneider, Klaus F. Zimmermann, Holger Bonin, Karl Brenke, John Haisken-DeNew, Wolfram Kempe: Employment potential of a dual support strategy in the low-wage area. IZA Research Report No. 5, 2002.
  12. ↑ Federal Audit Office wants to abolish craft bonuses. In: GLASWELT newsletter. 02-2011.
  13. ↑ Special Report No. 1/2008. European Court of Auditors, April 1, 2008, p. 3.
  14. ↑ Employment Outlook 2006. OECD, 2007, p. 115.
  15. ↑ Thomas Jung-Hammon: The socio-political suitability of job creation measures. 2008, p. 32.
  16. ↑ a b Torsten Steinbrücken: Economic Development & Location Policy. 2013, p. 276 ff.
  17. ↑ Swiss Confederation, Federal Office of Energy: Analysis of financial measures in the energy sector. October 2008, p. 51.
  18. ^ Christoph Giersch: Between social justice and economic efficiency. 2003, p. 112.
  19. ↑ Angela Bergschmidt: Basic considerations for measuring and evaluating deadweight effects. March 2011, p. 6.